[marshray]

Would people feel a lot better if instead they just went and changed the circuitry to produce lower quality sound?

Yes, as long as there was a halfway plausible explanation that it cost less to produce.

[jmaygarden]

In this case it does cost less to produce since they don't have to develop a new product and setup separate manufacturing processes. That piece of foam saves a lot of money.

[colanderman]

My guess is the headphones cost $20 to produce. The $350 price tag covers R&D.