Looking at systems that have done this or are doing this -- specifically dedicated handhelds and mobile devices, I think the result will depend mainly on how developers react, and thus what this kind of policy does to the software ecosystem.
Firstly, I don't think this kind of system would (or should) just go on for the "lifetime of a console." A manufacturer doing this would probably do away with the conventional console cycle altogether and just keep refreshing the same architecture indefinitely like what Apple is doing with the iPhone and iPad, keeping backwards compatibility and continually refreshing the OS. Sony might do a "PS4S" or something but the PS5, if it's smart, would be the same architecture and OS with full BC but beefed up.
Anyway, a big part of the reason this works with Apple is because the developers don't all rush to primarily optimize around the latest hardware spec. You usually get very few iOS games or apps that only work with the latest model. Most have legacy support going back three or four models and just as many OS versions, while adding extra features for people using them on the latest model and OS. Some games get updated to run at higher resolutions on newer models. Some older games with unlocked framerates even just automatically run better. With Nintendo handhelds it's been a mishmash. There were a ton of Game Boy Color-exclusive games, but during that time you also had a lot of games that still ran on regular Game Boy but had extra GBC features. There were even a few games that had extra features when played on a GBA.
It's hard to say how console developers would react. AAA console developers love pushing specs as hard as they can, but they also want to reach the widest audience possible. Part of me says most of them would read where the market goes like how some current-gen games had last-gen versions but de-emphasized or cancelled them when they saw how much current-gen hardware was selling. Games like Madden would probably have legacy support going back like four or five hardware models.
As for customer confusion, I don't think they'd be anymore confused than they are with iPhone models. If a PS4S came out the people who want one would probably just sell their original PS4s and get into a routine of doing that every time the hardware refreshes.
If anyone tries this soon it'll be Nintendo with the NX. If it is indeed two machines sharing an ecosystem, I don't see why they couldn't eventually expand the number of form factors like Apple has over the years.
