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Here's what will happen...

The iPad 2 will be discontinued after the iPad mini is launched at it's price point of $400. This will provide Apple with the following starting price points of Free to $500 in $100 increments for mobile devices that can connect to iTunes and App Stores. They won't want the iPad 2 to compete with the iPad mini on price and they can't cost it at $300 because that's the starting price of the new iPod Touch devices.

Many will argue that since existing 7" tablets are priced at $200, $400 is out of the question. Well, Apple will release a tablet closer to 8" and it will have the same in-screen touch technology as the new iPhone, although it won't be Retina. It will probably still have an A5, since it wouldn't make sense for it to be faster than the new iPad. What you now have is the thinnest, lightest, fastest tablet in the 'small tablet' market. That will easily sell for $400. Apple will then release the iPad 3 Spring 2013 and the 'new' branding scheme will die forever, hopefully.
 
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The iPad 2 will be discontinued after the iPad mini is launched at it's price point of $400. This will provide Apple with the following starting price points of Free to $500 in $100 increments for mobile devices that can connect to iTunes and App Stores. They won't want the iPad 2 to compete with the iPad mini on price and they can't cost it at $300 because that's the starting price of the new iPod Touch devices.

Many will argue that since existing 7" tablets are priced at $200, $400 is out of the question. Well, Apple will release a tablet closer to 8" and it will have the same in-screen touch technology as the new iPhone, although it won't be Retina. It will probably still have an A5, since it wouldn't make sense for it to be faster than the new iPad. What you now have is the thinnest, lightest, fastest tablet in the 'small tablet' market. That will easily sell for $400. Apple will then release the iPad 3 Spring 2013 and the 'new' branding scheme will die forever, hopefully.

There is no way what you are describing is going to sell at that price. Especially without retina.
 
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