$800k for a 28nm full-mask set? This is an amazing offer, at which foundry will I get it that cheap?

Get an itemized quote, do you think you pay the full $2MM up front? If you do, let me know I will gladly negotiate for you next time for 10%. that is the payment you will be making PRIOR to your mask. There are other payments, but you seem to have an inkling of what you are talking about so you know that, don't you?
That I do not believe KnC is producing a fully designed asic should be obvious by now.