I'd have to disagree.
Housing - You can rent a nice furnished house for around $300-$400 month. We're not talking in the middle of nowhere, run-down, or in a slum... we're talking a pretty cool house. Example:
http://www25.brinkster.com/cmhome/other/B002.html
That's about $365 USD for 3 bedrooms,3 bathrooms, 3 air conditioners, built-in kitchen, furnished with luxury furniture. Surely not semi-backpacker living.
Transportation - One can catch a see lor in town for 10-20 baht, they're kind of like a covered pickup that acts as a bus. We're probably just going to buy a moped like everyone else, no need for a car there. On a larger scale one can catch sleeper trains across country for cheap, and we actually caught a flight to Mae Hong Son for $17 USD each.
Eats - "Quality" food is of course a pretty open ended term, but one thing Thailand is known for is good food. You can get delicious dishes in local restaurants and plenty of fresh ingredients at markets, all for much cheaper than in the US. The obvious exception is American food, because things like cheese and bread just aren't as easily come by. We found a pizza dinner in a Chiang Mai restaurant usually ran us around $6 for two of us. Ouch. Definitely a luxury item.
Clothing - Not even close. For casual items like shorts and cotton shirts you can bargain to around 80 baht, under $2 USD. I saw a lot of tailors where you pick out material, get measured, and get a suit, jacket or dress and I didn't look at prices but I'll wager they were much cheaper than anywhere in the US, thrift shops aside.
I didn't price electronics either but there was plenty of street vendors with all kinds of crap for cheap. Heck you can even put an eye-patch on (argghh matey) and buy DVDs of movies that are just coming out in the theater in the states, or software by the bucket.
I've little doubt one can live a much cheaper lifestyle of similar quality in certain other countries. Not in Tokyo, Seoul, Hong Kong etc. but Chiang Mai? Sure. $900 for two of us would be fine.