"For a 4.7-inch screen, a PPI of exactly 555 is absolutely required to be able to directly map all images/graphics/icons to the new screen." --> I never said it's required for them to do a 4.7" display, I said it's required for the screen to be able to directly map all images/graphics/icons and prevent them from looking like this. Sure they can do a 4.7-inch screen without matching the 1:4 pixel ratio, but then every single app will look like crap until developers re-master every graphic used in their apps, a change that is much greater than simply adding new pixels in the Y-direction for the 5/5S, which some developers still haven't done for the 5/5S! And developers will now have to create, support, and fix 2 completely separate UIs for the 4/4S/5/5S and the new 6, rather than simply creating, supporting, and fixing one UI that work for all 4/4S/5/5S phones.
As I stated in my edit - somehow, it works on Android as not all apps look like crap (at least on phones). My guess is, Apple has some dev tools equipped to help.
Credible sources say it'll happen. Apple won't release something that screws with app quality. Therefore I believe there's something in between that will allow for the sources to be right, and Apple to keep its app quality.