This "branding" exists only in the minds of camera geeks who waste time on this forum. The rest of the camera buying public could not care less about this supposed distinction. A top of the line M7 won't affect sales of the other M series cameras any more than the 7D affected the Rebels.But it would mean they would muddy the waters of the branding that has made the EOS M system the best selling mirrorless ILC system on Earth.
If it ain't broke, don't fix it.
The kinds of cameras and lenses you want for the M system make much more sense in the RF mount and EOS R system. Both from branding/marketing perspective and from an engineering perspective.
For the record, though, I don't "want" any particular system. I'll consider whatever Canon produces, whether it is M, R, EF or EF-S mount. Actually, if the R5 performs as well at it's marketing claims, I could be content with that and just crop my images.
I just happen to think that it makes sense for Canon to have one camera line that is full frame and one camera line that is APS-C. This seems to be the way they have been going with mirrorless and I think the handwriting on the wall is that they will continue down that road. As I've said before, given the average 7D user, they would only need to produce one or two lenses in the M mount for most buyers and I can't see them repeating the EF EF-S mess with different lenses for different size sensors in the RF system.
You keep hanging on to this idea that the "M" system is small and pocketable as somehow meaning they can not produce a larger body. That seems like a much smaller distinction than the one between APS-C and Full Frame sensors.
Only time will tell though and I really don't care from a personal standpoint.