If we want to go based on economies of scale, a 20" (1600x900) TN panel with a low-end Sandy Bridge chip sans dedicated graphics, but 4GB of RAM and 500GB hard drive seems doable for $999.
That saves them the cost of the GPU and the much nicer panel. They could probably price it lower than $999, but a mere $200 gap gets them a sub-$1K price and makes it easy to upsell to a more capable mid-range iMac.
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