This just smells like something for the mass consumer electronics market.
You're almost certainly right, and that's why I'm getting a kick out of all the people here whining in anticipation of why it's not going to be as good as a 5DIII. That's not the point of the camera, and they're not the intended audience.
Personally, I don't see that the intended market is all that big, but Canon has better marketing research tools at their disposal than I do.
But you can pretty much guarantee that it's going to slot between the top-of-the-line point-and-shoots and the entry-level Rebels. It may well cannibalize both. But it's never going to compete with the xxD and above SLRs; nor will it compete with the ELPH or A-series PowerShots.
The problem that Canon will face is that most of the Rebel buyers are (intentionally or otherwise) buying into the EF system, and a lot of the PowerShot users don't want the hassle of switching lenses....
Without a crystal ball, or insider information, you've probably guessed about as close as is possible.
I also expect a G1X sensor, maybe based more on the tech of the 650D with integrated PDAF.
What I do see as an interesting twist is the suggestion that Canon will be launching small EF primes, with the intention of using them with an adapter on the mirrorless body. That way, Canon gets mirrorless buyers to be more likely to invest in the EF system, creating an upgrade path to an EOS body - much the same way that if I were to move exclusively to full frame, I would lose the use of one lens, since I have only ever bought one EF-S lens. I would almost say it would make sense for Canon to entirely drop the EOS 1x00D series, and replace it with a mirrorless body.
My issue is that I would like the ability to change lenses on my G series. I would like a camera that produces reasonable image quality, but doesn't need to be able to see in the dark, and that is small enough to pack into a notebook bag. I couldn't care for fast AF tracking. What is important for me is a socket for a cable release and a hotshoe for occasional flash use with my existing Speedlites or wireless triggers.
The G1X already fixes for me the issue of sensor size, but it doesn't fix the issue of not having a wide enough aperture to take portraits, or to use for street photography. Slightly better shutter lag would be a bonus.
A mirrorless system with a general purpose zoom and a couple of primes would work for me as a camera that I can carry in my bag every day, and even take along when cycling. - I would like something better than a G series that is easy to accommodate in a backpack when bushwalking or cycling, and light enough to mount on a gorillapod.
For my tastes, the G1X sensor format will give good-enough IQ in a package that is just small enough. It is going to be about compromise.