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You're insane.You're right about the memory vs. money, but doesn't most of the cost of a game go towards development costs? Say SE sold a FF7 remake for $50 on a 1 GB (1024 MB) cart, at 2 million sales they should definitely be able to turn a profit...
*Edit: i know you said that twice the memory means twice the cost, but since the carts will be produced in a rather large quantity...
On top of that, I doubt the market for those games is as big as you think. You need to consider that those games are not all that old, nor are they particularly hard to find. Many younger players that didn't have a PSX do have a PS2, and they can play all of those game just fine on it.