This week, TechCrunch took the wraps off the second milestone prototype of what was to be the $200, MacBook Air-thin browsing tablet now being called the CrunchPad (not a bad name, actually). The good news is that, even though this latest prototype is a little beefy, the team still believes that the final design, should it be made, would be about 0.7”. It’s far easier for a “pure” tablet to achieve such a slim profile than a clamshell.

The bad news is that the $200 price point indeed has proven unattainable and the final product would be closer to $300 in price. Who would have thought? Even at $300, the VIA Nano-based tablet would be far more capable than the RDP-based Smart Displays Microsoft launched back in 2003 and at a third of the price. But something else has changed since those days, too – the advent of the iPhone and iPod touch, which provide a decent Web experience for even less. Unlike those products, the CrunchPad can handle Hulu and other Flash video, but those are longer usage scenarios that are well-suited to netbooks that can run native apps beyond a browser and have a real keyboard.

There are some interesting usage scenarios around the CrunchPad. It could idly serve as a digital picture frame until it’s needed or be nice raw materials for custom installers, but in general the market likely does not extend far beyond the Web-obsessed TechCrunch reader, who can use it to manage their Chumbys.