I think 1200 for a new MIA Fender is a rip-off, yes. I believe 750-850 would be fair.
I think SX is a huge value for the money, and with some(sometimes a lot) TLC, it can do the same job as Fender, with very few people able to know the difference. But there are differences, tone just isn't a big one.
The wood is the same, if we are talking alder bodies and not Sadowsky's chambered bodies. IMO, IME, SX keeps the price low with cheap labor, cheap,cheap,cheap screws, cheap pots and wiring, and minimum attention to fretwork & nut work. If SX were MIA(paying for American labor), and improved these shortcomings,which are at the present-time up to the buyer to fix, they would probably cost what a MIA Standard Fender should cost...$750-850.
OTOH, the SX bodies alone are worth the price of the whole bass, and truthfully, the tuners alone would probably come close to making it worth it. IME, the tuners are very good, eventhough the chrome plate on them looks a little cheesy.
So, IMO, the price of the SX is justified, but the current MIA Standard Fender price is not. Is Fender ripping you off? No, you argree to that price when you buy one, no one is making you do that.
I don't own a Sadowsky, so I can't speak from experience about them, but I do know that time = money. And IME, it can take a lot of time and care, and skill to make any bass it's absolute best all-around. So, if you think Fender's price for the MIA Deluxe series is fair and you buy one and then take it to a luthier for special upgrades,(like custom shaped neck, chambering the body to make it lighter, an EQ made to spec, etc.)how much would this extra work add to your initial investment of $1700? Probably close to Sadowsky's price, if not more.
I come from the time when everyone modded their Fender's w/o a 2nd thought. I think the point is you get that same foundation to build on w/o as large of initial investment from SX. They are very similar to CBS Fender's, some are even better out of the box.