There's a reason I called it a thought experiment. Z180 is not 16-bit, but in the alternate reality of this thought experiment, Z180 wasn't necessarily the Z180/HD64180 that we actually got, but the Z800 that should have been built instead of Z8000.
Sometimes I like to indulge fantasies that if Tandy had played their cards right (and a bunch of other moving parts had worked out, one of which would have had of been things happening a *lot* differently at Zilog) we'd all be using descendants of the original TRS-80 Model I. But, realistically, I don't think there's any universe in which it really makes sense that one of the architectures that started as 8-bit would have really been able to make it through all the subsequent evolution in once piece... any better than the 8088 did, anyway. And it had to cheat to do it.
Aside: My TRS-80 fantasy mostly revolves around Tandy *not* responding to the FCC crackdown on the Model I by splitting their product line into the fundamentally limited Color Computer and the hermetically-sealed-and-boring Model III. Instead someone at Tandy HQ was smart enough to realize that the thing that was great about the Model I was its modularity, acknowledged that Apple was nibbling hard at the public's mindshare with color and graphics, and thus ordered the Model I be remade into a modular Model III with a handful of internal expansion slots (with the full CPU bus on them, and also including a PHANTOM line to allow for paged memory to be implemented after the fact) a 4x NTSC system clock, 3.579Mhz Z80 CPU, and a CRTC-based video system that could do 512x192 mono graphics as well as artifact colors similar to the Apple II or CGA by cycle-stealing main memory. (Text display would still come from a couple K of SRAM, which could be overlaid on the graphics mode if desired.) I'm reasonably sure they could have sold this for about what our world's Model III cost, and considering Radio Shack's huge retail presence could have stolen quite a lot of Apple's thunder.
Combine this with the thriving third-party innovations in TRS-80 operating systems and software, the determined efforts of cloners to leverage the fact that the only part of a TRS-80 that wasn't freely cloneable was the ROM, and even that *could* be solved by just licensing a Level II BASIC work-alike straight from Microsoft... I think there's a real chance they could have kept the Model I's trajectory going up at the late-70's pace into 1983 or so. And if that worked, and Zilog actually had the Z800 ready for volume shipments that year,
and it really had turned out to be a performance winner with real 16 bit capabilities... I dunno, maybe they could have kept Tandy's platform relevant a lot longer than it was in the real world? Of course, getting beyond the 80's still presumes that the Z800 itself would have some kind of 386-level successor that takes it cleanly into the 32 bit era. Which, yeah, didn't happen. Certainly not a timeline that mattered.
...Anyway. The Apple IIgs is probably the closest thing we have in the real world to what we're dreaming about here, and let's face it, it demonstrates pretty clearly the problems of trying to take a 1970's architecture into the latter half of the 80's. Leaving aside the whole issue of it being way, way too late to really be relevant it's also a pretty awkward machine, forced to be a dual-mode beast with an entire Apple IIe swallowed up inside, the presence of which imposes all kinds of nonsense and performance sacrifices. Sometimes you just need to flip the table and start over again... which is, in fact, why it's so amazing that the PC platform never actually did that. And I think pretty much all the credit for that lies with Intel. You can say a lot of bad things about them, but nobody came even close to groking the importance of backwards compatibility and upward growth paths the way they did.