I think you are right. Right now the battery technology severely lags behind other things in terms of making devices smaller. In a very un-Apple like fashion, they had to make the iPad 3 thicker just to put a bigger battery in it. I bet that was the last resort for Apple. I don't see battery technology catching up any time soon. We may actually be stuck with the non-retina display for 2 gens at least on the iPad mini.
If you look at the iPad mini video on Apple's website (around the 2:30 mark), they show the internals. It seems like there's an unusual amount of empty space for an iOS device. With the advances they've made in battery technology (like the iPhone 5), perhaps it's not such a stretch. Filling the voids and having more efficient tech, like an IGZO display, could make all the difference.