I don't think a 7" tablet should have same resolution as a 10" one, its not the same ratio of length/width.
it should be, however, 1024px at least on the length. This is the minimum requirement for web and pdf. if its smaller, it will just fail, because it would be no better than a phone.
Battery should last at least 8hrs.
CPU can be the same, memory should be >1G.
HP should NOT intentionally water down hardware in 7" pad to differentiate it from touchpad, this type of pure business decision will more likely reduce Opal sales, instead of generating touchpad sales.