I think it's bullshit and an awful idea because:
1) I highly doubt you can put in such a small box a Zen 2 and RDNA, SSD, motherboard, power supply and cooling system (heat sink + fan).
2) Even if capped o 4TF, its cost would be very high. The loss of selling it at $200 would be too high. They can afford some loss, but not that high.
3) MS devs already have to make sure their games run in a ton of SKUs: XBO, XBO S, XBO SAD, XBO X, Series X, many PCs and now on top of that another one?
4) This would hold back the entire generation of multi games and the 1st party Xbox games.
5) Regarding Microsoft pockets, they already spent a ton of money buying studios and brands, and giving away basically for free all their games, including many AAA. They should go financially suicide again with console pricing if they don't want to see the games division being shut down.
I still Lockhart/Series S never existed and won't exist. The only option that would make sense for a second MS SKU would be a Series X All Digital with mostly the same form factor than the other one: no extra work for devs, no extra marketing campaign, no constrained gen, etc.