Must be at least 1280x720.
Same on phones - I may not upgrade until a 4-4.5" 1280x720 display is available. Technology is there - they can already do 960x540 on a 4" 6mos ago (Atrix), 1280x720 isn't too much of a stretch, especially adding an extra 1/2" over standard 4" displays.
MUST be able to do minimal HD, or I'm not interested.
And yes, I think 7" is the sweet spot.
So... for TouchPad 2...
Quad-core Qualcomm Kal-el processor, 1.2gHz or higher
Decent quality GPU integrated in, or separate PowerVR/Mali/Tegra gfx
7" 1280x800 display
USB port with host mode (via miniUSB/microUSB pigtail is fine to minimize size of onboard port)
Mini/micro HDMI port, with full 1080P and DD5.1 output via the HDMI port
Those are my minimums...
MicroSD is good for more than just storage - makes transferring back-and-forth much easier, without having to use USB. I think a full size SD-card slot, with SDXC support makes more sense. You can use a MIcroSDHC with an adapter, yet still feed the TP2 full-size 64GB+ SDXC cards...