If the new model is indeed slightly smaller as a whole, then doesn't that suggest there are only minor internal hardware upgrades, if any?

These technologies have not grown that much since the 770 was designed; many of the same limitations still apply. My guess would be that they have chosen to stick with most of the 770's internal capabilities, while also keeping OS2006, and to concentrate on a new look and other less fundamental changes (such as that onboard camera, onboard stand, two card slots...).