The thought of Apple developing a sub 13-inch notebook does seem odd considering the many negative comments Steve Jobs made towards netbooks during the iPad's launch. On the other hand, the current Air is slower and more expensive than the MacBook Pro. Moving to a smaller size would help differentiate it.
Pricing of the new 11.6-inch Air is not known, but the rumor states that Cupertino does not expect to shift more than 400,000 units by the end of the year. Although the timing of the product's launch will partially determine the number sold, 400k units is tiny compared to iPad or iPhone. The low sales expectation suggests that the new laptop is not likely to cost significantly less than the current model.