The current iPad is 2048×1536. What if Apple simply used the exact same panels they are currently using in the new 9.7 inch iPad? That would give us a screen at just under 7.3 inches. With everything scaling to 75% hit areas for touch would fall between the iPhone/iPod touch and the current iPad.
This sounds plausible. Just as plausible as a 1024x768 iPad mini.