Is it really that bad? The hardware processing and storage is effectively a S24 which retails for $800. Add the additional displays, cameras and controllers, an extra $250 doesn’t seem that out there.

Eh, I don't think that's how the maths works, especially for products that are in completely different categories. For starters, display costs relatively much more on a VR headset compared to a 6" phone screen, the unit cost is much lower for a phone that is sold in many millions, the marketing cost is different etc. There will likely be actual breakdowns that provide some perspective into this.