RGClark, I did not look too closely at your math, because it is too full of trivialised engineering decisions that are by no means trivial. For example, you cannot simply magic away costs by 'doing it the SpaceX way'. The "SpaceX way" is very dependant on the actual vehicles that SpaceX has been developing. Other factors aside, you're dealing with very different hardware and very different requirements here. You're bound to get different results.
Of course, if you 'develop SLS the commercial way', you've put a huge upset into the whole story. You might as well award ULA a contract to develop its Atlas V evolution, for example.
Introducing engineering into a discussion of SLS is a very slippery slope, because you rapidly come up with vehicles that are very much unlike SLS. SLS is the way it is because, essentially, the law mandates that it be that way. And of course, you get into the icky question of why you need SLS at all. But I digress.
The problem with SSTO specifically, has been pointed out at length many times previously on this forum. It is inefficient. If your kerolox SSTO can lift 70 tons to orbit, well, that's nice. But put a second stage on it (you could use something like DIRECT's JUS or SLS's upper stage) and you dramatically increase payload capability.
You could probably build a very nifty launch vehicle using 8.4 meter tankage, RD-171s or similar, and some sort of hydrolox upper stage, in the 70 ton range. It would be smaller, shorter, lighter, less dubious and likely less costly than your SSTO suggestion. There may not be good reason to do it, but you could if you wanted to. But it would not be SLS.