herewith, some disorganized thoughts on this topic:
Everybody hates the fact that it costs $500 (myself included, because I'd love to own this), and is doing all sorts of general moaning about "what passes for art these days" and such, but I think it's an interesting idea
You see the same kinds of discussions on forums for musicians. "Why does Guitar X cost $4000 when I can get Guitar Y that plays and sounds just as good for $499?" Well, because Guitar X is Guitar X and Guitar Y is Guitar Y. A lot of times, what makes a guitar expensive is (1) where it's made and (2) how much people are willing to pay for the name on the headstock, and if people are willing to pay the sticker price, what's wrong with that price? The fact that Guitar X costs $4999 isn't going to price people out of being able to buy Guitar Y.
I understand the concern about this sort of project bringing people into the homebrew scene who are looking to make money, but I don't think that's going to happen here. Ian is a writer, with his own audience (I really enjoyed Racing the Beam, FWIW) and this thing comes with a book of essays--what was the last homebrew game that came with a bunch of essays? Or a 152 page book? I would imagine the printing costs of the book have something to do with the price.
I think this project is something else--not "just" a homebrew game aimed at enthusiasts. (I use "just" in quotes because I think homebrew game authors are just as creative as any other artist, and their work just as valid). It's sort of aimed at a different audience of people, and that's why it's priced the way it is. The whole package is what's interesting to me--the fact that the game has a companion book. I find something about that depth of thought and the commitment to take Atari programming seriously as an art form very compelling.