> Why does everyone discount the idea of Power7 being moved into
> mainstream markets?

Is anybody really doing this? :-) While the POWER7 "as is" is definitely not suited for our market(s) a trimmed down (features, power usage, cost) version surely could be. That's exactly what IBM did with the POWER4 after all.

> When Apple required something more advanced than the G4 level
> processor, the processors that were eventually designated as
> G6s were designed incorporating features from higher end
> Power systems.

I take it you mean "G5", not "G6". And yes, the PPC970 aka G5 is a trimmed down POWER4.

> Even the mass market Cell architecture gains some power
> from similar incorporations.

BigGun says that the Cell PPE architecture (while being way older, so it's probably the other way round) is related to the POWER6 architecture:

http://amigaworld.net/modules/newbb/viewtopic.php?topic_id=29336&forum=2&start=180#504967

> If IBM were again to target a large consumer market, why wouldn't
> they base the product on their most powerful design yet? Isn't that
> sort of what they've done in the past?

Yes, exactly. But the real question is: Are IBM to target a large consumer market ever again with Power Architecture (not counting developments solely done for Microsoft or such)? :-)
However, there is something going at IBM regarding alleged trimmed down POWER7 cores:

https://morph.zone/modules/newbb_plus/viewtopic.php?topic_id=6268&forum=11&post_id=75659#75659

I'm not sure if The Register is right though, because POWER7 is an out-of-order design while the A2 seems to be in-order. But the A2 core based PowerEN processor doesn't seem to be suited for our market(s) either, unfortunately.