From what I hear, the engineers were told they could do anything they wanted to the Sportster, as long as they held the price steady at $6595. That immediately ruled out a new motor, which would have required a new frame, etc.
Oh well. I don;t much care for the Sportster as an everyday motorcycle or as a cruiser, but the basic 883 is a fun bike in the mountains just the way it is. Someday I'll buy one, punch it up to 1300 ccs, and add bodywork to make it look like the old cafe racer.