What strikes me is that there is differentiation between them right now, the full iPad has Retina, bigger screen and if I remember correctly a slightly faster processor. If the mini gets all of the goodies such that the only real difference is the size and 1Gb of RAM wouldn't mini sales significantly erode sales of the regular iPad?
I forgot if it was Steve Jobs or Tim Cook who said, but they stated that they would rather have one Apple product cannibalize sales from another Apple product than to have a competitor come in and take sales.
Losing sales to a competitor is basically what's happening at this point. Just for one example, I'm in the medical field.
Some pockets on scrubs and white coats can fit a full-sized iPad, but it's a fairly tight fit. Everyone walking around with a tablet either has an iPad Mini or an Android tablet of a similar size. Full-sized iPads, or any tablet of that size, are an extreme rarity. In this environment, at least, the iPad Mini is not competing against the full-sized iPad at all. If Apple cripples the iPad Mini compared to the full-sized iPad, they will not be netting more sales for the full-sized iPad. (I use an iPad Mini, and I've had people take interest in it and then wistfully remark that they own an iPad but can't easily bring it in. There's great interest in the Mini for work.)
Why would someone buy an iPad Mini over a full-sized iPad? There are two possible reasons: size and cost. If someone is choosing it for size, then Apple can do what ever they want in terms of specifications and it won't matter because the full-sized iPad was never a consideration to begin with. If someone is choosing it for the price, well... the Mini is still more expensive than Android tablets. Even if the margins aren't as good, a sale of an iPad Mini is better for Apple than a sale for an Android device.
I certainly hope they don't short-change the Mini. I'll upgrade if it has a retina display anyway (it'll make reading my chicken-scratch notes a lot easier), but if it's a lot faster and has more RAM that'd be great. I'll be thrilled if it has TouchID, too. TouchID may seem gimmicky for home users, but it would be amazing in the work environment.