Why not just release the Revolution as an expansion for GameCube?

Sure, they could release some sort of package that had the revmote, 512 MB flash storage, RAM, USB ports, and a wifi expansion for GameCube... but that would probably cost nearly as much, give you no CPU/GPU upgrade, the RAM would be slower, they'd lose the opportunity to have a fresh start with a new look and name, not be able to use full-size DVDs, and turn out like every other system add-on.