I'd also place my money on some internal spec updates. The SE size market is still large, for people who like smaller devices and for those who want budget prices. They'd be foolish to kill it off completely.
So apparently in India, there's two iPhone production lines:
One for the 6S and another for - yes, you guessed it - the SE.
It makes sense for the 6S line to move to produce the 7. That's not too big a jump, I'd imagine. It may even have less parts to worry about.
But it doesn't make sense just to stop the SE line, surely?
At this point, if the SE is going to stick around, I'd suspect that the SE will be spec bumped up to 7 era parts, where possible (if the rumours are true) so that one facility is (mostly) only receiving September era new phone parts and the SE gets to live but with the minimum effort on Apple's part.
I'd imagine that we'd only get the camera & processor updated now & maybe just maybe, the 7's screen (without 3D Touch).
But maybe Apple has data to show that really, people want a big phone and all they have to do is to make a phone at the correct price point.
Maybe it was that the SE was only really popular because it hit a particular price point (i.e. more than its size being a draw factor).
Even so, I'd find it odd to believe that Apple wouldn't have room in its line up for a product that appears to be pretty popular still.
Maybe though there's just not enough people who like a small phone to justify it, when you are looking at making tens of millions a quarter of a particular phone model.
Mind you, this is the company that still sells the Mac mini, so sometimes there's no rhyme or reason to what they do...