At first I thought it was something simple but useful like a small tablet Mac that could dock with a larger display or something along those lines.
But after reading all the hints over and over again, the idea that I can't get out of my mind is some sort of solution to the problem of tiny screens on small devices. So I think it's a small device with a way of creating a larger image, either something like a VR headset or Virtual Boy, or less likely, some sort of unfolding OLED thing, or more likely, something that involves a tiny LED projector onto a table; along the lines of
this.
The problem is, a projector gives crap image quality or is totally unusable in well-lit places.
Last I heard, Steve didn't like the idea of "OS X Lite" and wants full functionality in portables. It's clear via the OQO that it's now possible to get the size way down, but I think the OQO has serious usability issues that Apple has somehow addressed.
