That core was basically the Intel Atom of PowerPC architectures.
I agree with all of your sentiment, and most of your statements, but this one I have trouble with. Atom is basically an original Pentium, slightly modernized. To get that out of PowerPC, you'd need to start with a 603 or so, and bring it into a 2005 age. 603 migrated to 750 and 7400. But since the 7400 was essentially a 750 with a vector unit taped to the side, the 750 would suffice as an Atom-esque core. The die size of the 750 class machines in 90nm supports this.
The PowerPC core in the PS3 and 360 was derived from Power4, a server class processor, with bunches of stuff taken out and re-pipelined. The core was made in-order, the pipeline was brought down to allow the frequency to be amped up. The area of the PowerPC core in the Cell is about the same as the entire die (core and cache) of a 750 in the same 90nm technology.