I really don't know what Commodore was thinking with the CD32. It was such a flop here in the U.S. that I never even saw one for sale. The 3DO, CD-i, and Jaguar were far more available. I never bought any of them.
I'm still not sure what Commodore's long-term plan was for the CD32, if indeed there was one. It would have more sense to me just to release a new 1200 and 4000 with an internal CD-ROM, but again we have the "too little, too late" problem.
On a side note, I'm not really sure what it would have taken to win console gamers away from Japanese games and consoles. It really wasn't until Microsoft stepped in with the Xbox, suffering huge losses that would have killed almost anyone else, that a non-Japanese console was able to compete in the West (and it still sales badly in Japan, or so I'm told) since the "Crash Christmas" of the 83. It's really made a big difference IMO, since now American companies such as Bethesda and Bungie can make big money on consoles. You still see how Japanese titles dominate the Wii and PS3 both here and in Japan. There are still plenty of people everywhere whose gaming is limited exclusively to Zelda, Mario, and Final Fantasy, Halo be damned.
The main reason I preferred and continue to prefer computer games to consoles is the style of the games. I just never could really get into Final Fantasy, Pokemon, or Mario. Give me Ultima, Monkey Island, or Baldur's Gate any day. Of course now that times are changing, I might have to change my ways.