Yeah, I was almost taken in by this until I looked at the screen and asked myself, “is that a CRT?!”
I never got the chance to use one for more than a few minutes here and there, but it seemed eminently practical to me, no different from an Osborne, Kaypro or Compaq portable. (Certainly the Kaypro II was eminently practical; I used one as my primary machine—used mainly for word processing—for a few years in the late '80s and early '90s.)
I see no reason that the classic TRS-80 could not have been reworked into a similar “luggable” form factor: The TRS-80 Model I from 1977 is quite small already. Of course, that’s missing the disk controller and has less RAM, but I just pulled out a TRS-80 Model III motherboard (1980) I have kicking around, with disk controller and sockets for 48 KB of RAM, and it’s only 33 × 23 cm. I’ve little doubt that by 1982 they could have replaced much of the 7400-series logic with something more compact, but even if not, that board itself would fit into a (perhaps slightly taller) Kaypro-style case with a 9" monitor and a couple of full-height 5.25" diskette drives above it.
The CoCo was a Radio Shack internal design, in partnership with Motorola. That explains the switch to the 6809 and the MC6847 video controller. The original design was actually for a a cheap Videotex terminal, but swapping out the modem and adding a few other things produced a decent home computer, and Radio Shack did need something with colour at the time.
I don’t see the lack of backward compatibility as a bad thing, actually; one advantage was that the 6809 opened up the computer to much more sophisticated software than was available on the Z80-based TRS-80s, such as the multitasking, multi-user OS-9 operating system.