“Apple will be going forward with the 7-inch iPad, currently targeting an October 2012 release alongside the new iPhone, and — here’s the killer — at a $200 to $250 price point,” Rene Ritchie reports for iMore. “According to our source, which has proven reliable in the past, the reason for such aggressive pricing is to do to the tablet market what Apple did to the MP3 market in 2004 with the expansion of the iPod product line — leave absolutely no space for competitors.”

“We haven’t gotten a firm read on the exact screen dimensions, so we’re using 7-inches generically here. Our source has indicated, however, that the 7-inch iPad will be identical to the current 9.7-inch iPad, just scaled down. That seems to include a 2048×1536 resolution display, just like the new iPad,” Ritchie reports. “If accurate, that would put the pixel density at around 326 ppi, the same as the iPhone 4S (and higher than the 264 ppi new iPad) retina display.”

Ritchie reports, “It’s hard to imagine a device with a panel that large and dense that having a price tag of just $200 to $250, especially when the baseline new iPad comes in at $500, but one way Apple will be keeping costs lower is by providing less storage capacity. $200 to $250 will get you 8GB… Recently AppAdvice reported on the logic of 7.85-inch iPad, which makes a lot of sense. And both iMore and Daring Fireball heard Apple had that device in the labs.”

Read more in the full article here.

MacDailyNews Take: Apple’s prices rarely end in “0″ which is why our headline uses $199 -$249, more typical Apple product pricing.

For grins before hitting “Publish,” we ran this past our sources, the most accurate of whom said simply, “Don’t scoff at this one. Can’t say any[thing] more.”

BTW: Steve Jobs pooh-poohed a 7-inch iPad. He never mentioned a 7.85-inch iPad marketed as “8-inch.” He also dismissed products that he later shipped (for example: iPod with video), too.

[Thanks to MacDailyNews Readers "Fred Mertz" and "Dan K." for the heads up.]