Removal of the keyboard alone would allow for dramatically reduced size, but still having the dedicated "bigger non-touch" screen allows you to keep working quickly without having to look around your hands to see what's happening as you work!
Honestly, if Sony can make an 11.1" widescreen laptop with HDD, tray loading optical drive, decent processor and integrated GFX with 7.5 hours of battery life and less than 3 lb. in weight then I think Apple can just give us the keyboard and a slot loading optical drive with at least 2 USB ports, mini DVI, and ethernet ports at least.
I am honestly not asking Apple for any miracles in technology at miracle prices. Just give me an ultra-portable mac laptop that is smaller than the MacBook and has amazing battery life.