Maybe I could be selective: only keep pages with inbound links (there are just a couple) or pages that rank high / get a lot of traffic.
Yes, this is essentially what I was suggesting. I'd get rid of the rest of the discontinued product pages and keep only those with a connection to the outside web via links or bookmarks. So, we're not talking about keeping very many of those old pages. Because of that, though, I don't see how you can keep the old product pages in their current context, since that context will be gone.
Whether you 301 the pages just for linking credit, or keep them in something resembling their current form would, I'd think, depend on the appropriateness of the old pages to the new context of pages in your "edited" site.... ie, to how well they fit in with your new products.
If you do have the context of some closely related products, keeping the old page as it was and adding outbound links to make it a mini-hub for related products, makes sense. Assuming you keep the pages more or less intact, they should be kept essentially at the same depth from home that they're at now, and incorporated into your nav structure as appropriate. Since these pages have link equity to distribute up and down in your nav structure, they will provide a net boost to your current link equity.
I continue to feel that it makes sense for these pages to rank if possible. As a consumer, I've run into enough supply chain issues over the years that locating products I'm looking for is not always easy, and I value those ecommerce sites that refer me to appropriate related products or to other vendors. Depends on how really helpful your product suggestions are, of course, why you no longer have the products, how scarce the products otherwise are, etc.
If you'd be straining just to find a target for redirecting your anchor text equity, a 301 to a general category page may be the most helpful you can be. Put yourself in the shoes of a visitor following that inbound link to see if redirecting it makes sense.
Again, I don't see you hanging on to a mass of old pages. The idea of a legacy mini-sitemap for the overall site makes sense if you have a lot of legacy product pages with inbound links, which it doesn't sound like you do. Under circumstances as I understand them, linking to a legacy sitemap from home would be giving it too much importance, but lower down in the site hierarchy might not be.