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Lee is also, I think, dancing around The Subject That Cannot Be Rationally Discussed by talking about price points and whether or not consumers will tolerate them. I think, in general, that most people will pay $10 or less for a backlist book that they crave and $6 or less in general for a backlist book that they might like, and anything over that price point they most likely won't buy. Whether or not THAT is profitable for the publisher remains to be seen, but I don't know why it wouldn't be over the long haul.
I think the biggest problem is that publishers aren't taking the long view. Not that there's a lack of evidence for THAT.
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I think price is really the question. I think that the publishers would certainly be willing to put out backlist at $6-10. I think a lot of posters here think that backlist prices should be $1-5.