Having a lot of products isn't bad if they all serve a distinct purpose. The problem with Apple's models in the early- to mid-90s was that nobody could tell what the hell the difference was between all of them, so choosing one was confusing and stressful.
The truth is, most PC makers have that same problem today. I've occasionally gone to various PC makers' web sites to see what they have, and I can never tell at a glance what's what. They have a dozen different models titled with cryptic numbers and no descriptions besides "Great for Photos!!" (okay...so what isn't?!).
Apple could add any number of new products to their lineup IF they keep it easy to understand. So no, introducing an iMac XL, iMac GX, iMac XS725, iMac WTF and iMac Multimedia Edition would probably not be appropriate. But introducing a minitower wouldn't confuse anyone.
As an all-in-one, the iMac can be considered in a class of its own. I don't think of a minitower in terms of putting a new machine between the iMac and the Mac Pro, I see it as putting a new machine in the huge gap between the Mac Mini and the Mac Pro.