I think this will be much more of a convergence project than simply a larger iPad. How exactly I don't know since MS proved that the tablet/laptop combo is not ready for primetime. However with a die shrink and scaling up the processor, Apple's A7 processor could meet or exceed the performance of the current MBA.
I think the bigger question is:
Will there be sometime of included keyboard built-in/cover accessory?
Will it run iOS or OSX ... or both?
I believe one of the reasons behind Apple's push to rewrite all of its in-house software is to modernize all the underpinnings so that it can recompile (in full OSX glory) on ARM64 architecture.
I really think Apple is gearing up for another quantum leap ahead of the competition. This time it will incorporate exclusive technology that Apple has either acquired or developed (liquid metal, PrimeSense, proprietary ARM cores, etc.) and be very difficult to copy legally and technically. If you look at Apple's track record/development cycle they come out with something really ground breaking about every 3 years. So we're a bit overdue.