A useful way to think about the M9's insane price: A brand-new M9 body costs a staggering $7000. A Leica M7 (film) body costs $4400. That means the "digital premium" is $2600.

For contrast, a Nikon F6 film body, new (assuming you can find one) is $2500. The Nikon D700 digital body is $2700. Digital premium? Only $200. Of course, the F6 was something of a collector's item, so maybe a Nikon F100 is a better comparison. That body is $750 new, yielding a "digital premium" of not quite $2000. Somehow, I imagine the real answer, for Nikon/Canon, is somewhere in the middle of those two numbers.

If you look at it this way, then the Leica digital premium is maybe 2x what it should be, and the Leica base price is clearly out of whack as well.

If the Leica M9 were manufactured in the volumes of the Nikon D700 / Canon 5D Mk II, I'll bet it would go for half of it's current price. It's not that Leica's making a killing, but rather that they have very high development costs and an expensive manufacturing process, for which they don't have the economies of scale to help us out. If you read DPReview's Leica Factory Tour, they note that the manufacturing floorspace dedicated to the R-series of SLRs is much smaller than the M-series. Leica rangefinders are just tweakier to get right, and they (rightly?) make you pay out the nose for it.