Ohh of course, absolutely. Technically there is no problem. You could build it in a beer can if you wanted. Marketing, licensing, picking the games, that's a whole 'nother thing.
I think that once you start getting into computers (as opposed to game machines) the accuracy and expectation of what the gizmo is capable of goes way up. Might as well just get an 8-bit console from ebay or do emulation. I also think all the amenities and provisions of an 8-bit computer is "too much" for what is supposed to be a simple product.
Reverse engineering and recreating a 400/800 unit isn't hard, there's just a lot more of it. You got multiple ports, cart slot, SIO, keyboard. It all adds up and wouldn't be low cost - would you be willing to pay for something like that?
Sure there's things like that C64-in-a-joystick thing. But that's all you can do with it, play the built-in games.
The only 8-bit flashback "computer" that would be remotely attractive is one that had all the software of the major catalogs built in, Parker Bros. Atari, K-Star, Lucasfilm, Datamost, Sirius, Synapse.. The list can go on and on and get quite extensive. Then you might as well do a 5200 Flashback. It'd be just like the VCS - needing controllers as the only user i/o.
A much more practical and realistic solution is to build up your own emulation rig. You can boot from power-on BIOS to the blue screen MEMO PAD in 10 seconds or less. And drag and drop an image from your own custom made list. To me this is a far superior solution. Yes, it's a different gig entirely, but also very workable.
Sure it reeks of "computery stuff". But then what are you doing messing around with a +35 year old 8-bit machine anyways? And once you segue from one game to another game, one system to another system, on highly reliable modern hardware you won't want to go back.
With continually shrinking x86 machines and continually improving emulation, this is the way to go.
It could be done, but it won't be done - there's no viable business model where it makes a profit. There are many here with more knowledge than I have to explain why.
But as long as we're dreaming...
1. Black & White era coin-op games plug and play
2. Vector graphics coin-op games for plug and play into your HDMI display
3. Steve Jobs 1984 edition Macintosh flashback (for the rest of us... ...who didn't have a spare $1,500 lying around in 1984)
(apologies to those of you who've noticed that I keep posting these same dreams every time someone brings this up)
A dedicated Set-Top-Box emulation machine will cover all that. It won't look the part, but it will do what you ask with aplomb.
But hold on a sec. I could see a quarter-scale 1984 Mac, with a hi-res b/w or color screen, and in place of the floppy drive, an SD or microSD slot. Couple of USB ports, an HDMI port, all you'd need. Not too different from the failed StarForce Pi. Apple would never allow it. But it would be nice if THEY themselves commissioned such a project! The Apple Mac was a project to be proud of. And it would sure as hell look cute on a desk!
With their +600 billion $$$ they could easily afford to give one of these away to everyone that owned an Apple back in the day, for free. It's just that corporate mentality doesn't have room for sentimentality no matter how much we want to think otherwise.