The three big problems I see with AMD pushing APU performance to desktop-grade SKUs are cost (bigger dies) vs. addressable market, memory bandwidth with desktop memory implementations, and potential cannibalization of lower-end desktop SKUs.
As you imply, it's not really a function of not being possible as AMD could easily stick some eDRAM on the package with more GPU real estate allocation, and they could also just add more cache directly to the APU. The problem then shifts from performance to cost, both in terms of per-unit BOM but also in terms of producing a separate product, and whether there's actually a market for such a thing.
Would folks be cool with buying US$500+ APUs that could say keep up with an RX6600 + 7700X combo?