1. IOS is ARM, OSX is Intel architecture
Doesn't have to stay like that forever. Even Intel could expand their offerings.
They could, but Apple will need to re-do one OS in full, that would hurt I feel. A major change, discarding current users
2. Apple's mantra is a better tablet and laptop, than a hybrid which will be a compromise
At the moment, tablets don't seem to be pulling their weight, at least compared to their smaller counterparts (smartphones/mobility) and larger counterparts (laptops/greater utility). It doesn't make sense for a lot of people to have three devices when two would be more than enough. The iPad is now the in-between device that needs to grow up or disappear. Sure, the iPad in its current form is enough for some who just need the basics on a bigger screen, but that doesn't mean the iPad can't evolve into something better, more functional.
To evolve as you say, it needs to be a hybrid, a full computer, and a tablet, as the Surface is. Now, its light, cheaper, and portable, ideal for its prime purpose, consumption. Read, Play, Watch, Listen.
3. Cannibalism. usually buy two devices, now just buy one
No, usually buy three devices, now just buy two, a smartphone for mobility and a laptop/tablet device for greater utility/productivity. That may not work for everyone, but I have a feeling it would work for a lot of people. I'm sure Apple would rather cannibalize itself than someone else.
I agree, I excluded the phone as we all need the phone.
4. Cost. It would cost as much as a MBA and a iPad Pro, less one screen
How do you know what Apple would charge for it and if that price would prohibitive? I don't obviously. The assumed math is, a full iPad, plus a full say MBA, less one screen. The Surface is not cheap, as its basically a full laptop, with a removable screen.
5. Heavy, as its two devices with a little weight saving
How do you know that it would be heavy, at least heavy enough to be a deterrent to acceptance?
As above. Plus many posters welcome a lighter tablet
The Surface Pro 3 is good, but I know Apple can do better. They have to at some point.