This isn't the first time AMD ditched the high end for the "sweet spot" market. This only works if they actually do it right and well, count on AMD to not miss an opportunity to miss an opportunity, as far as the Radeon division is concerned.
They need to do better than simply letting Nvidia dictate the entire pricing structure of the whole product stack and then just "slotting in". That won't gain market share and they still have to be careful in brand perception as the "second rate" company to grow their marketshare. Personally I think not having a high end product hurts that a bit.
But...the majority market isn't the high end, so they really just have to do their mid-range and sweet-spot segments correctly and it could be a good strategy for them. Especially with Nvidia's largely overpriced and under-performing (not to mention 8GB lol) blundering of the mid-range with the 40-series.
I'd say don't launch RDNA4 until FSR4 is ready, and really push the price war. Not this BS $900 7900XT garbage that the market later price corrects. Come out the gate swinging. If they can deliver a 8700 XT or 8800 XT (or whatever it ends up being called) that at least meets the performance of the 7900XTX / 4080 Super with much better RT than RDNA3 at say $500-$600, that would be a great thing for the market.