Rx560 is built on 14lp and has 14-16 polaris CUs at 1100-1200 mhz. Cezanne is built on N7 and already has 8CUs running at up to 2000Mhz. If everything else on the die was kept the same, except just doubling the number of CUs, converting the DRAM controllers to DDR5, and doubling the L3 cache to 32MB, but not even bothering to update the CUs to RDNA2, you would only expand the die by about 40% max. With decently specced DDR5 memory in "dual" channel, it would easily wipe the floor with the RX560 while staying in the same power envelope of the 5900/5950.
If the CUs were updated to RDNA2, and reduced to 12CUs, the effective memory bandwidth would improve due to better compression and efficiency and overall performance would push towards the rx570. That's more than enough for decent 1080p gaming. It would also improve power efficiency. Yes, there would be a larger die. Yes, it would be more expensive to produce, but it wouldn't cost $50 more. If they need more die per wafer, they can always make a half size Cezanne to add lower end volume.
As for KadyLake-g, it was crazy expensive for what it was because it was a three chip module that included an HBM stack when it was still expensive and had thermal issues because of all the 14nm chips present. That was an exercise in futility and bombed in the market as a result. The proposed chip is of manageable size and won't cost an arm and a leg to make.