How about instead of creating a c128 core, you could just implement a “c128 in C64 mode” core which would mean having vdc available in software like novaterm/striketerm. You wouldn’t create a new machine, but give 64 users the ability to have higher resolution/text.
Even ignoring for a moment the relative large amount of development effort for only a handful of programs (while that time could be spend on fixing bugs in the C64 part of the design instead for example). The current architecture simply isn't capable of displaying 80 column text or the required 640 pixels. The framebuffer logic that eventually creates the VGA display only supports 400-ish pixels in horizontal direction (with 16 colors). I did play with ideas like that the past, but for example SID emulation that wasn't planned originally uses up most of the previously unused FPGA logic now. So each time a new proposal like a VDC (or for example SCPU as a recurring theme) it is always a question what can be removed to make room. Answer probably is nothing. I don't want to remove 1541 emulation or SID emulation or the whatever other feature added with good reason to make room for a VDC that only a handful of programs are going to use. Yes you could make multiple cores each with a sub-sets of features, but that will surely disappoint somebody somewhere as (s)he wants VDC plus whatever feature that was axed.