I still think they should make the sensor size somewhere in between full frame and APS-C in size
I have my doubts that they will make the sensor any larger than APS-C. I think the 1.5" (G1X) size is more likely. What I would hope is that they design a lens mount which permits a light circle to cover an APS-C frame, even if they use a 1.5" sensor.
There could be a market for a system which uses two sensor sizes - around 1" at the low end for entry level models and APS-C at the high end - much the way the EOS system has supported full frame, APS-C, APS-H and Super-35.
By using different sensor sizes in one system, Canon could build more economies of scale by accommodating a wider range of models from entry level to high end, and thus more shared components.
A system with two sensor sizes may also have a greater marketing ability to capture P&S upgraders at the bottom end of the market, and grow them into more demanding photographers.
I hear ya, that all makes perfect sense and is more probabable
however Canon have a unique opportunity that the other manufacturers dont have
lets say that regardless of sensor size they are going to need a new mount and thus new lenses that take advantage of the lack of a mirror.
since Canon already have advanced APS-H sensor tech which produces Image quality almost as good as Full frame they could realistically make such a beast which will hand leica their Arse mainly due to the most likely massive cost difference, the APS-C to M43 space is crammed with other manufacturers competing. Also all these systems are quite advanced and have user bases. I doubt canon are likely to be that competative in this realm. they are quite late to the party which is already in full swing.
of course no matter what canon does having a good EF adapter is going to give them a solid advantage to be able to leverage their massive strength of fantastic lens selection.
A higher end mirrorless with larger sensor is going to really take it to the overpriced leicas and I think it will be a huge hit. in this market they would only really be competing with leica and offering AF will be just one of its many strengths over the expensive german.
I wonder if they might down the track develop a small sensor mirrorless and a larger sensor mirrorless.