I believe we are on opposite sides of the same opininon. (wrap your mind around that one) I don't feel a replica is copyright infringement until it placed in the marketplace for retail so I am in agreement with you as to the legal/moral implication. Now, the cost, be it $500, $5000 or $5, is irrelevant because the moment it is "for sale" it is copyright infringment.
As far as price goes, if someone is willing to pay $500 for "product X" (nice Muppet replica, original creation or jar of fireflies), there should be no criticism.
I just wanted to clarify. I'm not the MHC legal department, so beyond my opinion I don't really have anything to say.