Exclusively multi-touch interfaces have only limited applications at sizes much bigger than an iPhone. Something the size of a piece of paper doesn't seem big, but it'll certainly feel big if you've been moving your hands all over it for a couple hours.
Most people set up their mouse so that a few inches of hand movement will take the cursor from one side of the screen to the other. Having the size of a movement scale 1:1 to its on-screen representation would get tiring pretty quickly.
I bet it would be closer to $1000. You take the innards of a Mac Mini, put a large touch screen on it like the iPhone and you have a tablet mac. Their costs probably wouldn't be more than $600 but Apple makes a huge profit on everything so $999 - $1199 is probably where they would sell it.
