Gruber is well-connected in the Apple world, and has been very accurate in the past.
The blogger says that Apple is indeed testing a prototype of the device, but has not yet decided on whether to release it.
If accurate, the prototype has 1024x768 resolution (equal to the first two iPad) and will likely run on the same A5X processor seen in the third-gen iPad just released last month.
While the rumors have persisted for years, there is little reason to believe Apple will ever release a smaller iPad. To get to their $199 price point for the Kindle Fire, Amazon had to cut a lot of corners and that is apparent with the tablet, despite its popularity. Apple's motto has always been to keep functionality at the highest level, even if the components in the device are outdated compared to other devices in the market. A "cheapened" iPad is something Apple will likely not stand for and unless they are sacrificing a lot of their margins and brand, there is little way they can compete on price.
Written by: Andre Yoskowitz @ 5 Apr 2012 22:22