c128 was a case of idle engineers with no plan/strategy gluing unsold garbage components (graphic chip left over from earlier failed project and Z80) to c64 and scamming public with misleading name. 2 CPUs, 2 graphic chips, 2 monitor outputs, all in one package.
Even without a C64 mode, the C128 is a cool system. Dual monitor outputs, 128K RAM, 2 MHz 6502, great BASIC, fast floppy drives. The only thing that would have been better would have been to add these things to the C64. Also nice: dual SIDs.
They could have added all of the above without breaking backward compatibility. This would have encouraged programmers to check for the enhanced features and use them if available.
Of course, long term, they would have needed to go with the 65816 and ultimately switch to another processor architecture.
I think if all of the 8-bit and 16-bit systems had survived until today, they would all be running on Wintel hardware but with their own operating systems, just like Apple Macs.
