Playing the game of "if this was true" (which we now know it isn't), this would be a poor idea. They need to not sell the iPhone 6 on the low-end in light of recent issues, and they REALLY need to not sell the iPhone 6 Plus in light of the recent issues + Bend-gate.
The iPhone SE in its current form is superior in terms of computing power to the 6 and the 6 Plus, and shouldn't be replaced by them in the lineup.
If I were Apple, I'd keep the 5s/SE form factor around over many years and over multiple releases (like how is done with the MacBook Pro, iMac, MacBook Air, Mac Pro, Mac mini, iPods, some iPads, etc.). It's a great form factor and the people buying it don't care that the design is from 2013 (2012 if you count the iPhone 5); they just want a phone with somewhat decent power under the hood and at a great price. So when the 7 and 7 Plus come out next year, I'd have the lineup be something like this:
-iPhone SE (in current form and unchanged)
-iPhone 6s in 16GB (or with a 32GB model to replace the 16GB model) and 64GB selling at the prices the iPhone 6 models are currently sold at
-iPhone 6s Plus in 16GB (or with a 32GB model to replace the 16GB model) and 64GB selling at the prices the iPhone 6 Plus models are currently sold at
-iPhone 7 in 32GB, 64GB and/or 128GB, and 256GB selling at the prices that the (16GB, 64GB, and 128GB) iPhone 6s are currently selling at (respectively)
-iPhone 7 Plus in 32GB, 64GB and/or 128GB, and 256GB selling at the prices that the (16GB, 64GB, and 128GB) iPhone 6s Plus are currently selling at (respectively)
Then, around March, update the iPhone SE internally, leaving the body style otherwise unchanged. Give it the same A10 that the iPhone 7 will likely have Maybe give it an updated FaceTime camera and rear cameras to keep it in line with the iPhone 7 in the same way that the current iPhone SE is in line with the iPhone 6s. Easy for Apple to do. Better for customers who either can't afford the larger phones or prefer the smaller phones. Win-win.