I guess it could, but it would probably have crap battery life. The retina iPads have a battery larger than the 11" Air, and just a little bit smaller than the 13". (42.5 Wh compared to 35 Wh and 50 Wh). The rest of the components in the MBA use significantly more power than corresponding components in the iPad.
It's a simple case of where to use the power budget. For the iPad, they focused on the display. For the Air, they focused on performance.
Don't forget that Haswell will consume much less battery. The tradeoff will deal with that.