If canon bought out a FF 22mp, Pro AF, 7-8fps 7dII at the same SRP of the original 7d, who would pay more then double that for a 1dX?
As Canon discovered with the 5D2, it's not about profit margin alone, it's about (profit margin) x (units sold). Sure, you don't want to cannibalize sales from a camera with a much higher profit margin...unless you can sell enough extra units to make up for it. It's well-understood (or at least widely reported) that P&S sales account for vastly more sales and profits than DSLR's, even with much lower profit margin; that same reasoning applies within the DSLR line. It's all about maximizing profit and, if they believe they can do that with a 7d2, or a 5d3 that's essentially a FF 7D, they will.
I think the 7D Mk II needs to be put to bed now. In my view Canon would be mad to bring out the 7D Mk II...Its serving its purpose on the market so Canon wont touch it just now.
The 7D's Nikon competitor, the D300s, has apparently been retired in preparation for the D400. We can only assume that the D400 is designed to take the "best sports crop" title away, so the 7D may not be serving its purpose on the market much longer.
To many the 1D+1Ds merger was a surprise; perhaps we shouldn't be surprised by more surprises.