I paid less for my 7800gt than that, and the gt is more powerful. :/
Yes, but there is no 7800GT for AGP.
AGP: 6600GT ($150), 6800GS ($200), 7800GS ($350)
PCI-e: 660GT ($150), 6800 ($175), 6800GS ($200), 6800GT ($250), 7800GT ($300), 7800GTX ($450)
So you see, the 7800GS can sell for that high of a price, mainly because there is no other option available in the AGP flavour. It is said to beat the 6800U in performance when stock, and most likely the X850XTXPE as well. If not, when OC'd it would for sure. It's very unlikely there will be another card released for AGP that is weaker in performance than the 7800GS, because there is the 6600GT and 6800GS to cover that gap. AGP still longs for a $250-$300 card though :-\.