Yes! I have long thought the xbox should have a desktop mode. Even if it isn't a full Windows system, just a browser, file manager, photo/video viewer, and office apps would be all most people need. I imagine such a device would be very popular among students who both want a console and need a computer.
This is the device I was referring to. At the end of the day, there really isn't a technical difference between an xbox branded handled PC, and a handheld xbox.
To your later point about it not running xbox games, I do feel like that would have been a nice value add. The handheld probably has the hardware to run at a Series S level. It is really just software restrictions that prevent it.