"It'll become overpriced when anything produces a better picture to my eyes and costs less, and has greater flexibility."
There are plenty of products out there with better picture, less cost and greater flexibility, yet we still buy B&O.
B&O is a lifestyle product and you pay for design, userinterface, brand and simplicity. What you are not getting is "bang for your buck", multi zone systems where you can listen to different sources in different rooms, high quality video distribution, HD DVD, Blu-ray etc.. and again we still buy B&O :-)
Specifically regarding Beosystem 3, you should compare with dedicated video processors such as DVDO etc which are USD2-4k and not receivers with build in video processing.