They seem to be largely modeling after the launched idea of the Sega CD, even more restrictively in some aspects e.g. CPU expansion. The Sega CD released 3 years prior to the given timeframe and offered just shy of 1 MB RAM with the same proposed CD + multi-disc support. The main improvement being the speed of the drive (The '91 Sega CD was 1x instead of 4x) and yeah, they don't do that over a literal CD drive but that seems to have more to do with not wanting to make a literal CD drive the same as using an FPGA isn't about using FPGAs as much as not needing literal ASICs be made.
It's important to note they are talking about an imagined expansion to the system in 1994, not an alternative version of the console released in 1985. It's reasonably feasible to do something of this level at the time the question is more one of "would it really be sensible". With the SNES already being 4 years old at this point and the PlayStation releasing that same year anyways (with twice the RAM, 2x CD support, and a hell of a lot more compute) I can't think anyone would bother. At the same time, the project is explicitly not measuring by what people bothered with at the time and rather what the reasonable limits could have been.
It's important to note they are talking about an imagined expansion to the system in 1994, not an alternative version of the console released in 1985. It's reasonably feasible to do something of this level at the time the question is more one of "would it really be sensible". With the SNES already being 4 years old at this point and the PlayStation releasing that same year anyways (with twice the RAM, 2x CD support, and a hell of a lot more compute) I can't think anyone would bother. At the same time, the project is explicitly not measuring by what people bothered with at the time and rather what the reasonable limits could have been.