The idea that a base model gun would somehow cheapen Colt's image is overblown. Quality issues will damage an image more than a less expensive model that works.
In 2002 when I bought my SA Milspec (which is extremely accurate now that I replaced the factory SA barrel with a factory Colt barrel), I chose it over the Colt because A) I'd heard too many horror stories about poor Colt quality, B) the Colt I was comparing with didn't seem any better built than the SA, and C) the SA cost $150 less.
I love my Milspec; it works great. However, since the time I bought it, Colt's quality has significantly improved (though it still has a ways to go) such that I recently bought a Colt Commander. Nice gun that even "feels" better made than the Springer.
Colt may currently sell every gun they make, which would suggest they have no reason to change. If that's the case, they are short-sighted. Times change. They should be thinking longer term.
I'd like to see Colt steal a trick from GM: Have an entry-level model that encourages you to move up to the next level. Buyers will tend to stick with the brand they know if it's good quality. (Conversely, they'll leave the brand they know if they've been burned by quality issues, and very often never return.)
That's basically what SA has done with their Milspec and Loaded lines.
A quality entry-level Colt without the bells and whistles and priced $50 - $75 higher than the Milspec would fly off the shelves. Most Milspec buyers I've met would rather have a Colt, but they get the Milspec for #1 the price and #2 the perception (true or not) that the Milspec is about the same quality as Colt's lower-level but more expensive models.
As has been said numerous times on this forum and others, 1911s can become an addiction. If someone with an entry-level Colt wants another 1911 with more bells and whistles, they'll go Colt if they liked what they had.