"which yes will make it cost more than a paperback while ebooks remain a secondary release"

You mean because paperbacks use the formatting from the hardcover edition, so their formatting comes for free?

I am still not convinced that your maths is really set in stone. For example, does the retailer still need to get 40%? Editors and proof readers are the same for ebooks as for paperbacks, hopefully.

How hard is the formatting of an ebook, what does it entail? I don't think they can just add new paragraphs? Couldn't the process be automated (LateX seems to be doing quite well with automated layout?