Where should the new R7 be positioned in the Canon line?
From what I can tell, it’s the mirrorless follow-on to the 90d which, based on what Canon has said, is the follow-up from both the 80d and 7d mk2. For whatever reason, Canon had already decided that they no longer are going to produce the 7d line, which, looking back, probably wasn’t a great seller. The reason I think that is that the introductory price of the 7d mk2 dropped relatively quickly after launch.
As much as I would have appreciated the better ergo/controls, more robust build and other little touches that Canon reserves for only pro bodies, I seem to be in the minority. I’m ok with paying more for those things but again, it seems that there aren’t so many who are willing to pay more than $1500 for an APS-c camera.
Unfortunately, for now I can’t get the camera I really want from Canon at any price. Eventually, maybe the R1 will be it.
Until then I’ll use my R6 and R7 and not worry too much about what the R7 could have been. Instead, I plan to focus on getting the most I can from the R7. At least the price is very reasonable and the specs generally look great.
I think your analysis is spot on especially considering both Canon's and Nikon's approaches to high-end or sports APS-C bodies.
Both the 7D and D500 were widely loved and cherished by extremely vocal minorities. Yet, what I've read is that neither camera sold particularly well. Now, with the ever decreasing dedicated-camera market, does it make sense to produce such niche cameras?
Apparently--and definitely so far--the answer is no. Nikon appears to have little interest in producing a D500 successor (and it took many, many years for Nikon to release the D500 after the highly cherished D300). Part of Nikon's problem is that it doesn't have a strong mirrorless AF sensor-system that doesn't rely on stacked-sensor technology. Excluding the Z9, all of Nikon's mirrorless offerings have AF-trailing AF performance. Canon, by contrast, has the marvelous R6/R5 tech that may be the best AF tech available that doesn't rely on the extremely fast read-out speeds of stacked sensors. Start with R5 tech, add a little spice from the R3 including the processing engine, and Canon can produce an APS-C that can be a successor to the enthusiast-level 90D while providing improved AF performance over the 7D II.
Thus, those who are saying that the R7 is in-between the XXD and 7D series are correct. There probably isn't enough demand to produce a 7D successor that ticks all the boxes of that line--or of the Nikon D500--at the price level required to sell such beastly cameras. However, Canon is in a better position because they already have a highly competent "affordable" AF system that provides enough performance to make the 7D attractive to both XXD buyers and 7D--albeit, grudgingly--buyers.
Now, Nikon is having a wonderful time selling more Z9 cameras than it can produce. Once that demand is sated whether the eventual "junior (grip-less) Z9" will be APS-C or full frame remains a question. I'd put my money on full frame, which is where the market is currently.