Let me offer one other perspective that wasn't mentioned in this thread... as I'm a "New" TG16 guy. But I'm a patient collector and not one paying anywhere near prices quoted in the beginning of the thread.
It's not 20 something year olds driving the high end market... $500 is a LOT to most of those guys. It is spill over from other collectors who are tired of collecting their main system and want to expand. For me (born 84) it was always NES / N64 as my two favorites. Then I went to Genny / SNES, then PS1 / Gamecube, back to Gameboy, etc.
It's not just TG16 getting price spikes this year, PS1 has been insane too. Take Team Buddies for example... was always about $60-$80 CIB and maybe $150-$200 Sealed. Been that way for 5 or 6 years, completely flat. In 3 months, it is now $200-$250 CIB, literally 3x or 4x value in 3 months. And PS1 has generally been dead compared to Nintendo... but the Nintendo overflow has to go somewhere. And some of them are overflowing here, so I don't see TG16 prices cooling off anytime soon. Not necessarily good or bad, just reality.
And I do enjoy playing the games, but I also enjoy collecting them. It is not impossible for someone to enjoy doing both.