The 7D NEEDS an update, I think it would be quite silly of Canon to either not replace it or take it slightly down market. There needs to be an APS-C flagship if Canon is serious about staying with the format.
To be a proper APS-C flagship, the 7DII needs:
It would be a dream camera for those who can't afford the 1 series or need the extra reach of APS-C. Charge $2-$2.5K and you have a winner.
- 100% viewfinder
- Dual Digic V
- The same 18MP sensor with improved DR
- Clean ISO 12,800
- 10 fps with a decently sized buffer
- 61 pt AF from the 5DIII
- The usual video improvements
- I'd even consider a builtin portrait grip like the 1 series bodies
Those are pretty attractive specs, but your$2-$2.5k idea is nothing more than a pipe dream. Do you really think they'd sell a body for $2k with those specs, especially after how they priced the 5D mark III?
*edit* You forgot f/8 to further canibalize 1D X sales
I don't think that any specifications on the 7D MkII would endanger either the 1D X or 5D MkIII; if you're range limited you will want APS-C, for maximum subject isolation and ISO sensitivity you will want full frame. [N.B. I'm not so sure this would have been the case if Canon had produced an APS-H 1D Mk5 (and FF 1Ds Mk5) instead of the 1D X]
Actually, I think that Stone's specifications at roughly that price point are exactly what Canon would do if they were to produce a successor to the 7D.
By moving the 7D MkII up market, they'd free space to move the rest of the APS-C range up as well, which might help with the competition from 'mirrorless' and Sony's aggressively specified (and priced) SLTs.
The other possibility is that Canon and Nikon are planning to amalgamate their two higher APS-C lines into one (like the old Canon XXD bodies -and perhaps hinted at by the lack of a D400 so far). This would enable them to fill the $2000-$2500 price point with an 'entry level' full frame body instead.