Apple would be wise to release a Retina mini alongside iPad 5 next month, IMO.
It would be nice but not necessary IMHO. Adding the Touch ID sensor would be enough of a feature-upgrade. And I believe the Touch ID encryption code requires the A7 for fast response. So we might see an iPad mini with Touch ID plus A7, which would be a huge step forward. And I'd expect Apple to push their 64-bit advantage (and benefit from economy of scale) by putting the A7 in as many iOS devices as they can.
But a Retina LCD display would require more power, which would either reduce battery life or require a larger heavier battery. Apple had to increase the size and weight of the iPad 3 to support its Retina display. I'm hoping that was a one-time deal.
On the other hand, if Apple has secretly ramped up production of IGZO-based displays (LCD or OLED), then a same-sized Retina iPad mini might be possible. And, if Apple wanted to fill in that new-product-gap between now and WWDC next summer, they might ship a Retina iPad mini next spring.
But for the 2013 holiday quarter, I'd guess that Apple will ship an improved iPad mini that they can produce in huge quantities. Adding Touch ID + A7 + Retina screen all at once might not allow them to fulfill demand. Too many new technologies at once. Too many risks and unknowns.
And I think Touch ID is vastly more important to Apple's current and future success than screen resolution. Screen resolution will come over time, and frankly I don't think the average iPad mini user minds the current "1x" resolution. I certainly don't mind it. But Touch ID is a (patented) differentiator that Apple can leverage in all their iOS devices immediately. Convenience and improved security are probably more important to consumers than the Nth degree of screen resolution. We'll know pretty soon either way.