Difference to the old 12" MacBook would be, a 12-core A-something chip would blow out any current Intel or AMD chip out of the water. Like so badly. A14 single-core is almost on-par with whatever Intel currently has. And that is comparing a passively cooled phone with heavily, actively cooled workstations that draw 10x-20x the power.
At this point I'm convinced they are going to transparently emulate x86-64 and it will still be decent performance. It's insane.
Yes! Keep the same size, bump the screen to >12.5" with smaller bezels, add a second USB-C on the other side, change to new keyboard and add TouchID. Apples 12-core chip built on 5nm TSMC process will have the performance of a 16" MacBook Pro but in a fanless form factor and a 10 hour battery even under load. GPU is probably worse than dedicated AMD but better than any Intel integrated one.
Also while we're at it, put a 120Hz promotion display.