Really?
You're the one without imagination if you can't figure that out.
I'll give you two examples.
My roommate flies a small plane. He won't buy the current iPad cause there is nowhere he can put it at the size it is. He really does want one. He's waiting for the smaller one because he knows where he'd put that and it could be put in the cockpit without getting in the way of everything else (and yes, pilots use the iPad a lot. We were just at a convention of other people who have his plane and the iPad was the big thing. They all had figured clunky ways of dealing with the size but I'm sure all of them would also appreciate a size that would fit better in their plane that didn't involve putting it away in some hard to get place when not in use. They were just more willing to deal with clunky solutions than my roommate. None seemed uninterested when he said they are coming out with a smaller one or thought that it would make it too small for use.
I want more of a glorified book reader. In fact, if my mom hadn't given me an iPad already, I would have considered the Nexus 7 (despite having a mac and iPhone and the iPad would work well in that ecosystem) because it's much more what I want need. Something better sized for reading a book (the iPad is too heavy, I want something I can comfortably hold in one hand) that also does some games (the android ecosystem isn't too bad for that). There's a loss Apple would take by not having a 7" (I'd gladly pay a little more to have the tablet be in apple's ecosystem and be able to use iOS's appstore). And yes it would make it lighter (really? You think a smaller size is going to be the same weight?), and also, less weight distribution far from where I'm holding it on the bottom side (balance of it does matter. Even if it is smaller but same weight it is still easier to hold in one hand).
So, I think you are the one who has no imagination when your can't possibly think why anyone would need a small iPad. Remember, not everyone is you and not everyone has the same desires/needs or are in the same situation. You really need to learn that what you want is not what everyone else wants. Or in other words, grow up.
As for the impossible thing, that does not make Apple making a 7" iPad impossible. That makes it improbable. I suggest you learn to use the two words appropriately (or you're going to be eating a lot of crow in life). Now maybe it's impossible (now) for them to make it at a price that people would pay and give them profit, but then again, are you Apple? Do you know for sure they haven't figured out some way? Or what they are planning on doing? For all you know maybe they are willing to lose some profit. Or they managed to finagle some deals that they can sell it at a price it will compete with other 7" (remember, they still have the name for tablets so they can still price some bit more and compete just for having name recognition).
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