If the Playstation 3 had used a more standard CPU, and went with DVD instead of Blu-Ray, but launched at a more affordable $399 USD as a result, how do you think this would've affected its sales and how Gen 7 played out?

I think they would have sold a lot better, probably been their third straight 100 million seller. I can't imagine it making any difference on the games. Well, at least DVD vs BluRay. Who knows in regards to Cell.

But no Cell in PS3 would have made this gen more interesting. Does Sony still remaster so much stuff or is there PS3 BC eventually in PS4?

It would have reached at least 120million sales. Easy.

The entire gaming landscape would be different today. Part of the reason why more and more games went multiplatform, was because they couldn't make enough money selling on just PS3. But if PS3 was easy to code for and at that $400 price point, it would have sold somewhere between 100-120 million. 360 would have been 40-65 million. 360 gained a ton of momentum off of having console versions of PC games that PS3 didn't have, or running those games better if PS3 actually had them.

Imagine the PS3 with...

Left 4 Dead
Mass Effect Not delayed for years.
No Oblivion Delay
No Bioshock Delay
GTA4 exclusivity
Assassin's Creed franchise exclusivity
Ace Combat 6 exclusivity
Dead Rising
DMC4 exclusivity
Final Fantasy franchise exclusivity
Dragon Age
Fallout 3 running smoothly
Fallout NV running smoothly
and a ton more games. Too many for me to remember or list. It would have been almost a complete repeat of the PS2 gen in terms of Sony exclusivity. Any game franchise that was exclusive to PS2 would have stayed exclusive to PS3.

Sony was focused on power so if they went with a traditional CPU they likely would have flat out had the better console as far as graphics comparisons go.

I blame it on Sony itself for buying Toshiba and IBM's bullshit that a 1 TFLOPS CPU was possible as early as 2004. Yes, really. The entire Cell project thing was known since 2001. Also, trusting the extremely shady Rambus to deliver 1-2 GB of affordable and super fast "Yellowstone" DRAM by then.

So, that's quite an early point of divergence. Almost everything would be different, including the CPU of the X360 console.

After CDPR announced that people who buy Cyberpunk on current gen Xbone get the XSX upgrade free, I hope it pressures other publishers to follow suit and not make us buy games twice. I’m sure Sony has a similar plan in place.

If they hadn't used a Bluray drive they hadn't had the problems with manufactoring of blue lasers which caused them to postpone the launch of the PS3 by almost a year. So they would have released the console at the same timeframe as the Xbox 360 so the latter one wouldn't have had the time advantage. Paired with the PS2 and PS1 backwards compatibility this would have been a huge advantage. When PS3 was released backwards compatibility wasn't that big of a deal anymore because we already were in the middle of the HD-generation. Also because of the lower price the console would have been more competitive and Sony wouldn't have to axe the backwards compatibility feature in the first place.
If they hadn't used the Cell CPU then maybe the whole architecture of the console would have been different. They wouldn't have had the absurd idea to include 2 Cell CPUs, one as the main processor and one which acts as a GPU. They wouldn't have to come to the realization that this was a bad idea and wouldn't have to include a striped down Nvidia GPU at the last moment which was even less powerfull than the Xbox 360s GPU. They most likely would have developed a much more powerful GPU which was even more powerful than the one in the Xbox.

The lower price and earlier release date would have prevented many customers from switching to Xbox 360 and PS3 could have reached 100m sold units.

I'd say keep BD and have a cheaper non BC version instead. Without BD, games would all be HD DVD now, and MS was a big part of the organization on that side of the format war. I couldn't ever see SNY allowing that to happen. Would that push SNY to go all digital sooner like MS is trying? Something more user friendly than cell probably would've helped, but I think SNY could've gotten away with it more so than they did.

A $399 base PS3, without BC at launch, would've had 360 around 20-25 mil behind where it was, by 6 years in, with PS3 scooping up those sales. While cell may have been a pain, as long as PS3 sales were strong enough in comparison early on, it would've pushed devs to put a lot more effort in much sooner. 360 being in the position it was, gave devs breathing room they wouldn't have had otherwise.

Quite a few people I knew who had PS2's, had 360's earlier on. It was the console to get, and many others jumped in because of that. Some of them ended up grabbing a PS3 once it went slim and became cheaper, whether they added it to the 360 or transitioned fully to it. Getting a solid start to sales at the beginning of the gen is fairly important to long term sales, in general.

I don't think it is a complete win for PS3.

PS3 losing Blu Ray means it loses a selling point and if both the 360 and PS3 went with HD-DVD or whatever, then the 360 still wins on that front. The 360 launched a year ahead and garnered a good reputation from the OG Xbox and the Halo series. It still would have sold quite well, especially after Halo 3 launch. The PS3 would not have the perceived "advantage" of the cell either and being so similar to the 360, when the 360 already launched a year ahead isn't exactly a good thing. The 360 still has the Kinect which outsold the Move quite easily, so again 360 has advantages even late gen.

However, bad PR for the 360 would be a lot more pronounced, especially the RROD issues. So it depends if the PS3's new architecture would also create new HW problems to match the bad PR for the 360.

I could be wrong but I believe remasters will be rare next gen, first, because of backwards compatibility, second, because its said the BC will improve the visuals and performance, hence no need to pay again full price for remasters when ps4 games will be like 5 dollars.

Still doesn't mean the game would be 4K HDR, hardware cant do that, but most games are already enhanced for the pro, so at least the most important games would look great on ps5 without need for remasters. The only games I can think of that really needs a remaster is GTA5 and Driveclub, they look bad once I got used to the pro enhanced games.

In fact I'm already happy with current gen games enhanced on the pro such as Horizon, god of war, I wouldn't buy a remaster at all, unlike the ps3 games that really really needed remaster because of lack of AA and low resolutions and very low framerates below 30fps. PS3 games Ill buy as many remasters as they can make, I'd pay full price for a mass effect trilogy remaster and a max payne 3 remaster, also Deadspace trilogy remaster and Darkness.