My two main thoughts on this are:

1. It won't cost $200. The Nokia N810 has similar specs and had a price drop to $300, so I don't see how this will happen. It might be possible to source the parts for 200, but not build it, ship it and make a profit.

2. Why not use Ubuntu MID? I have not used it, but it was made for these kind of devices. Certainly much easier and cheaper than writing custom linux/ff code. Just add Firefox with a preset homepage to the startup and you're done :)