As you mention, the services can already be provided at a fraction of the cost. I think the key problem is the trust/reputation that established publishers provide. There is massive demand for "trusted publication space" and the price develops accordingly.

I've been thinking about how to remove trust from this process and haven't come up with anything good yet, although I desperately want to believe that it's possible...

I do think that a good solution would be able to disrupt the current system though, the current scientific performance metrics (citation count, H-index, etc.) are almost entirely based on "real-estate" in trusted publication space (i.e. they only factor in publications in established sources) and they are extremely prone to Goodhart's law, so they become less and less useful to navigate the literature.