I think that this is the most interesting part of the rumour:
The unnamed tablet system -- featuring an 8.4" backlit TFT-display and built-in Airport Extreme -- will be marketed as a 'Home Portable' and will be targeted towards a specific demographic of users who want the portability of laptop but who do not require the power or diversity of Apple's current portable offerings.
If I read that right, then I assume that this thing will be priced under the ibook (i.e. under $1000). Given the smaller screen, I assume that the system will run a G3.
I'm not convinced that there is a market for this though. Overall it sounds like an expensive portable internet terminal (and we know how well internet terminals did, even at <$300). Does an average consumer really want to move their computer from place to place, BUT would be willing to live with such a small display? And it has that in between form factor that has so far been death to any who've attempted it (smaller than a true portable, but larger than a pda). It would be surprising to see Apple go out on such a limb given how soft the economy is right now. If they are working on something like this, I wouldn't expect to see it ship until things start picking up, if then. AFAIK, tablet pc sales haven't exactly been burning up the sales charts.