Imo it makes no sense at all to spend $1,000 or more(or even over $200) for an mp3 player, unless you are so rich that price doesn't matter. I'll stick with my $35 Clip+ for now, although if I find an enticing player under $100 I might buy it. The X1 is not enticing to me due to its short battery life.
I can definitely see where you are coming from TBH. The way I see it, it's all about how far down the line of diminishing returns you're willing to go. Some people will feel that paying $500+ for a music player is insanity (all you have to do is google all the news articles on gadgets blogs for the new ZX2, most of the comment sections I've seen there are full of non-audiophiles asking why anyone would pay $1200 for a device that "already does what my smartphone does").
After having actually tried the ZX1 for myself, I think it's just down to personal opinion and preference. Two people could walk into a Sony shop, try the ZX1 with the same set of headphones, and one could walk away feeling like there is no way it's worth the asking price, while the second person might put their credit card down straight away. Yes I suppose that line of thinking does have to eventually factor in how much money you make, but I don't think the ZX1 and similar are so expensive that they are in "only for millionares" territory or anything like that. Definitely a luxury item, but not impossible for someone on a modest income to be able to afford IMO.
Personally I find the players in the $1-2k+ price bracket pretty excessive, but as people before me have said, this is exactly the kind of place you'll find not just one but a whole group of people who are more than willing to shell out for them, and by all means more power to them I say. If they have found a way of being able to afford them then who am I to tell them they are crazy and it makes no sense for them to spend that money? They are surely experiencing a better level of audible enjoyment than I, even if it might be marginal.
Just my two cents, and I totally respect your opinion, after all it's the most rational point of view, even if it does rustle a lot of jimmies in a place like head-fi. The bang for buck is definitely in the cheaper end of the market music player wise, especially if you don't have hard to drive headphones.