Why does it need to be a flat four? 924, 944, and 928 didn’t have flat engines. FIAT X1/9 and Toyota MR2 didn’t have them either - just make a cheap mid-engined car with an ‘off the shelf’ engine from a mainstream manufacturer - heck offer a cheaper version with the standard GTi engine. The idea is to make something cheaper.
It needs to be a flat four it it's a reborn 914 IMHO.
They did make something cheaper, the base Boxster.
Why would they want to lessen their profit margin?
We want something cheaper and simpler from Porsche, Porsche doesn't, they're doing just fine in their price range, no need to dabble in less profitable regions.
Plus, if it had a VW engine it would be a flop just like the 924 was.