Being that we've seen evidence only for images of that size, not of actual 9.7" 2048x1536 LCD's being manufactured, bought, certified, or whatever, this has a much broader implication.
Nothing ties this to the iPad.
All this means is that we could see a device that runs iOS with a screen res of 2048x1536.
It's pretty obvious that a merger between iOS and OS X is inevitable. Perhaps the first step is a 13" tablet with a Core i3, 4GB of Ram, 256GB SSD, and iOS/OSX dual boot? Don't tell me they can't do it, the Air is proof they can make the guts work, in the same basic form factor as the iPad 1.
Why would you want something like this? Besides being able to dock it for laptop-like use, you could have one device that had full OSX with 3-4 hours of battery life, or iOS with 6-8 hours of battery life, both with access to the same iTunes library, documents, etc.
Already the iPad has some issues being a Dock-connector-fed device (charging issues for one, lack of USB host capability for another), and with iOS 5 liberating the iDevices from needing any other computer, a mag-safe charged, larger, more independent tablet with Lion and iOS would serve a dual purpose for a lot of people. The iPad could never replace my Macbook or iMac but a tablet like this could definitely replace my Macbook.
This also ties in nicely with the new Time Capsule/Airport Extreme rumors that have us backing up our iPads. . . . personally I don't ever need to backup my iPad. It's a secondary device, and in its current incarnation it always will be for me. But if this was someone's only computer?
Now, the only thing I could see shooting this down? They'd probably have to make it 16:10 or wider if it was going to be a "real computer" these days.