I really don't think it is about cannibalizing sales for Apple. If they feel it is the right decision, they will. They have done this with other products of theirs in the past. No, I think for Apple its about how MacOS on a touch interface just doesn't feel right. When I have used Windows 10 with a touch screen, its not a great experience for me. The icons are small - like having to try and click the "X" button to close a window. The "X" icon is smaller than your finger input.
Apple wants to create the best touch experience and they do that with iOS and iPad OS. Its built for a touch screen in mind. Mac OS is built for input from a mouse or touchpad. From interviews that I've seen, Apple feels like this is a terrible compromise to try and make the iPad an all-in-one device for Mac OS. Microsoft took this approach and Apple feels like the experience is bad. The surface is not a great tablet nor is it a great computer because of the compromises it had to take.
An iPad is an awesome tablet experience and the Mac is great computing experience.