I'm still not convinced. I'm sure they care just enough to not have their customer's running to another company. And I hardly doubt anyone would switch brands over an APS-H in a 7D mkII, especially since the cost of replacing lenses is their main concern. Think of the cost to switch systems entirely.
Don't get me wrong though. I'm not trying to put Canon down in any way or sour with them. I just still believe they are just another company trying to turn a profit any way they think they can. If they think they'll make more money in the long run with a new sensor, I don't believe pissing off a few EF-S users is going to be a big deal to them. Besides, if they really cared, they would allow EF-S lenses to attach to FF and APS-H bodies and make everyone happy.
Eh, both Canon and Nikon have cared enough to do far more than "just" what was necessary to prevent their customers from running to another company. Nothing says either will stop doing that now.
Let me just say that companies make money by addressing their customers needs. This is a universal paradigm, PARTICULARLY in an industry that is as saturated and hasty as digital imaging. Unless you happen to manufacturer for a very specific niche (Leica, Hasselbald, etc), you will loose ground if you don't innovate and listen to what your customers want.
Anyway, you are right, people probably will not switch brands over a switch to an ASP-H sensor in the 7Dmkii but, it might mean that the upgrade path is cut off for a lot of people. This is particularly true because an APS-H sensor costs quite a bit more to produce than an APS-C sensor, especially when you realize that APS-C sensors are used in the majority of Canon's cameras. But, you are right, Canon is going to do what will make them the most profit but, I just think that such a decision is predicated more so on what customers want and need more than internal politics or, perhaps, technicalities. And, I don't think the average 7D user really wants or needs the added expense of an APS-H 7Dmkii.
Edit: One other thing that came to mind. Lens choice, aside from the general EF-S mount argument. Remember that the previous APS-H camera was designed specifically with sport shooting in mind. Sport shooting at the highest professional level. The 7D is no such camera. Pros and amateurs alike use this camera. Canon knows this. If the 7D becomes APS-H, there will be no suitable standard zooms or wide angle zooms for it. That means that Canon has to develop and encourage everyone to buy a new camera body and 2 new lenses. I don't think Canon wants to turn the 7D into a mini 1Dx.