A. NVIDIA sells on performance, not wafer size. People buy based on performance, not wafer size.
http://www.techpowerup.com/reviews/Zotac/GeForce_GTX_660/27.html
The 660Ti (mid-range chip for the Kepler gen at $300) outperforms last gen top chip, the GTX580. The GTX660 (4th highest performing Kepler) outperforms last gen's 2nd highest chip, the 570.
B. As big of an AMD supporter as you are, you should be very happy NVIDIA sold GTX680s for $500 instead of $200. (or even $300) Know why?
Not one person on the planet would have bought an AMD part if GTX680s cost $200. Everyone would have GTX680s and AMD would be out of business.
C. $500 is not NVIDIA's high end price point now. If people stop buying their $750-$1000 cards, prices may come back down to $500, but I wouldn't count on it unless AMD actually competes. If you want to blame anyone for NVIDIA's pricing, blame AMD. Look at their last launch the 290X. Yes, they caught up to the Titan in performance in the 50db meltdown mode, but the cards were definitely second class compared to Titans and 780s. Noisey little blast furnaces, while NV was selling cool and quiet cards.
Roy Taylor of AMD says "We love competition!" and "You ain't seen nothing yet!" but their engineering isn't backing him up to date. Maybe we'll see a change today with their announcement, but until they actually compete NVIDIA will charge first tier prices and AMD will take the scraps and keep losing market share.