My feeling is the basic thinking is that the Studio display + Mac mini will fit the bill for the lower end 27", with the Studio sitting in the space that was the iMac Pro, and realistically, a lot of the sorts of tasks people might stretch to the lower end Mac Pro for. My thinking is if they really went with this concept, they could have made something more impressive. The display itself has a full SoC in it, and has a power supply able to provide 96 W of power.
Suppose they did the following: Start with a Mac mini, remove the PSU, network and some of the IO from it, and reduce the form factor. Use the display's power supply and SoC to provide these features built into the display, with a single connector/cable to the "compute module". Note that the Mac mini has a maximum power draw of 150 W, and the USB C spec supports up to 240 W, so the capability to run something as powerful as a Mac mini with no external power supply is already possible. They could even have some sort of mounting bracket to attach the compute module to the back of the display. Then you have something that has the look-and-feel of the 27" iMac, but with the benefit that when newer chips and other hardware come along, you just swap out the compute module for a new one.