Yeah, I agree it has more features than the T2i, I just think that there is typically 3 types of people. Entry-level budget minded, above average hobbyist, and semi-pro/pro. Given that you have the T2i, the 7D, and the 5D/1DS, these 3 areas are fairly covered. If you couple that with the fact that MOST consumer retail outlets do not carry anything higher than the Rebel line, I think most beginners are going to opt for a T2i, with the thought that they are already going more expensive than the XS. ( remember, most people new to photography already think that getting a Rebel is like the top of the line ). People that DO know about photography and are more advanced would most likely opt for the 7D. I just don't think a flippy screen, step down in speed, and an aux. LCD are enough to make someone land at that spot on the scale. They would either revert to saving money, or go all in and go for the 7D. Originally I thought that the 7D was the replacement to the 50D. I mean it had a few more megapixels, a slightly faster speed, and improved AF. I understand that they are trying to hit some niche price point or maybe compete with a specific Nikon model, but I just feel that anyone that is above "newbie" status and using canon, would probably scoff at this upgrade. I would rather save the cash and just buy a 50D.
This is all my opinion though. I am sure that many people will get reeled in by the new bells and whistles. Just like people get reeled in by megapixels.