My first SLR (which I still have) was the Canon EOS IX, which was a small form-factor APS body that took EF lenses. The original 22-55 and 24-85 were designed for this camera. It was, in performance and construction, equivalent to the Elan or X0 series of 35MM film cameras. There was also an EOS IX Lite (in the US) or EOS IX 7 elsewhere, which was a Rebel X00 class body.
In other words, if the electronics are now small enough, you *can* now get a DSLR in roughly the form factor of the G series. Add a couple pancake EF-S lenses, and Canon is right in the hunt in this space without creating a new mount.