Expansion of a system's range <> massive change for the range. Right now, I think Canon has a big hole in the $1000-1500 price range. The RP is not terrible, but it's not competitive outside of sensor size. The 90D is good, but DSLRs are increasingly niche. The M6II is a start, but it needs an integrated EVF and IBIS.... nearly everyone else has that in its price range. An R7 with IBIS would probably cost little less than an R6. And again there is the basic kit lens problem. Does Canon make a crappy 15-xx variable aperture kit zoom or only do an F/2.8 L zoom? Again if someone has the money for big RF gla$$ are they really going to have much heartburn over buying an R5?With the M series, I can put EF and EF-S glass. But unless Canon changes their approach on the M lenses, then as you suggested, people are going to just use their (existing) EF glass. No upsell, bar the body. At least when they had 7DII, Canon could attract buyers to the L series and upsell. M7, no such opportunity. Yes, I accept they could produce better EF-M glass, but then I think they will have to change batteries, and body size (lens plus heat) and haven't they just designed an R7? With a M7, I now have this bigger body and only teeny existing EF-M lenses which will look quite funny. Canon never developed a big range of EF-S lenses. I think they are doing the same on the EF-M.
Design an R7? Take an existing R6, change the sensor (assuming the current 32M can cope) and voila. Price it higher than the R6. It will take EF and you can upgrade to shiny better RF lenses. Use the new RF 800mm with an APS sensor? Yep. Ergonomics for the larger EF lenses? Tick on the R, not so much on the M. Re-use existing tech / design (maybe all you need to do is change the sensor) given the M6 II can do 14fps. Tick. M7 would be quite a few changes. Have your APS-C sensor (R7), and when you replace your lenses you will have lenses which work on the R FF range (another upsell). You can use legacy EF-S or EF, there is the same upsell at first, but then there's some RF glass which you can use alongside (upsell). I dont think you need to produce any RF APS lenses, just use your legacy or buy new RF. Cause that's what any 7D II user wanted if they needed good glass.
I don't think either is a clean option, but I don't see a massive change for the M range. Slighly bigger M? Sure, I can see that. If they put in IBIS and Digic X, they may have no choice. Something designed to take good sized EF glass? Personally, I don't see that.
There's much less risk with the M7. There's already a big captive market for a premium zoom for M mount so that's much lower risk. It just makes sense. Again I think the whole R7 thing comes down to 7D shooters wanting to feel heard and included in the RF mount situation. I haven't heard any real objective or functional advantages of an R7..... just a lot of subjective projections and voluntary choices hinged around stuff like "futureproofing".