I'm not sure about the netbook and the 7"-device... the Maemo 5 user interface elements would be frighteningly large on these.

Hardware-wise, tough, it's a perfectly reasonable thing to do. Archos does exactly that. They have a lineup from 1.8" to 7" (including the 4.3" and 5" sweet spots), and nobody's talking about "niche markets" and "consumers don't want that" when they see their products.

Maybe with the Moblin UI instead of the upcoming Maemo UI, this sort of devices would be a dream. (I'm stressing "UI" here, beneath the UI Maemo is great. Moblin too, probably, I don't know how far they are apart, anyway... there are many familiar boxes in the Moblin Core overview)