It's not obviously insane compared to driving. It's a 4200 mile trip, basically the length of Europe and back. That's a minimum of 6 days of driving, ~$400 in gas, 5 nights in hotels during the trip (at least another $500), plus meals (three fast-food meals per day could be ~$200).
Obviously you can economize on any of these at some cost to your comfort and sanity. But because you can read a book on the train, or play computer games, or work, or socialize (or all of the above), you can easily conclude that a modest premium is worth it. That makes the $1100 fare a bargain, and even the $2000 fare might be worth it.
The real cost is the time. Most people who get yearly vacations can count on two weeks worth, and most of them aren't going to want to spend half of that on the journey; they're either going to go somewhere closer or they're going to fly. And that's still $400 for a cheap coach ticket, 8 hours in the air, and all the suffering you can bear in the airports at either end. Plus a taxi at each end, or long-term parking. You do get an extra 4 days to explore Portland though.
Driving is not the alternative for me. Flying is. Chicago to Portland is a 2.5 hour flight for $180-200 round trip, make it 4 if you factor in transportation and security.
That's why it's insane.
Trains should be competing with flying. Given the choice between a stressful, polluting airplane and an environmentally friendly electric bullet train with meals, legroom and cheap overnight cabins, I would choose the latter. But it can't cost 10x that of a flight.
I was extremely bored this evening, so I went looking for similar trips on European trains. I found a trip in May from Lisbon to Warsaw. Like the Chicago to Portland route on Amtrak, it's about 2000 miles and 42 hours. It has 6 transfers, including a 4 hour transfer from 10pm to 2am (ouch), and a few hours later a two hour transfer from 3am to 5am (very ouch). Only one of the trains has actual sleeping compartments. To match Amtrak I choose a private 2-bunk compartment on that train. I picked 1st class fully-refundable tickets on all 6 trains, again to match Amtrak. I've no idea if any of these trains have a dining car; I did see a photo of some vending machines. On the other hand, a ticket in a sleeper on Amtrak includes three meals a day.
The resulting price was $1067 for a one-way trip (the site couldn't find any return tickets). So even the high-priced $2000 ticket you saw doesn't seem that bad; that's the same cost as a trip of similar length in Europe.
For multi-country trips, you want a European rail pass, e.g. from this site [1].
A 5-day ticket for the entirety of Europe is about $480, though you get a 15% discount for two people. If you're only doing 4 countries, it's about $360. For $968 you get unlimited travel for a whole month.
As for sleeper cabins, prices vary depending on the route, but it's often somewhere around $20-50 per night per person [2] for a private, multi-bed "couchette".
Comparing US states to Europe is a bit like apples and oranges, though.
Edit: use http://biketrain.net/amsnag/amSnag.php to find a cheaper day.