Dennis.
You hit on the point that I was told is another reason that BMW approached KTM for a link up.
The Boxer engine is unfortunately not going to be the way forward,due to ever tightening emission controls,and the fact that BMW have just about wangled every last bhp out of the current version that they can,without making the damn thing too peaky.
My 'contact' mentioned the 800 also,and that it was a non-starter to make a bigger version due to weight/cg problems,which you alluded to.
Rotax was considered but they made such a mess of the new V twin developed for the Buell 1125 that BMW are now looking towards KTM,because they got their 950 so right first time,and the new 1190 is allegedly even better.
Even more astonishing is that I'm now told that KTM have made an approach to BMW to buy out BMW Motorrad completely !!
If that happened we would have to put Tsiklonaut on suicide watch !!!