A Smaller iPad?

The blogosphere is abuzz with rumors that Apple will release a smaller version of the iPad to compete more directly with Amazon's Kindle Fire and the soon-to-be-released Google Nexus 7. The key questions are:

1. Will Apple release such a tablet?
2. If so, when?
3. ...And for how much?

It seems to me that a lot of the speculation so far has failed to consider other expected changes in Apple's product lineup in the coming year that would have a significant impact on the roll-out of any new tablet. With that in mind, here's my take, in reverse order.