I'm sure that eventually someone will market a <19" UXGA LCD, but that will be a high-end niche product and therefore expensive. Fact is, the vast majority of people prefer 1280x1024 or smaller in these sizes. If any manufacturer wants a product to be widely accepted (and they do), they will make it appealing to the broader majority of users.
To put a different spin on it, it's financially better for a manufacturer to make one monitor that appeals to 90% of the market than to make 4 different monitors each appealing to 25%. The only way to make the latter worthwhile for them is to charge more, hence the niche premium.
As state above, displaying non-native resolutions on LCDs requires dithering down from the native. This appears as random fuzziness, having the greatest impact on small features such as text. This is not a problem that CRTs deal with, so the market dynamics are completely different.