Selling a 50-100k sedan almost requires it to aim at the BMW 7 market, IMO. But don't despair, over time they'll expand the lineup and I'm sure they'll make one that fits your needs.
The next model should be 30-50k and I would expect it to be about the size that you describe.
Making it smaller would probably require a lot more complex engineering and tradeoffs when it comes to the powertrain/batteries/etc.
It's actually very smart because they are leveraging all the work they have done for the Model S and getting another model out of it. Elon Musk has said in interviews that the Model S was actually over 90% new parts, which made it very complex to design and get the supply chain going. If the Model X has a significantly lower number of new parts, that'll make a big difference to the bottom line and time to market.
Could you expand on this? How exactly will Tesla bring about its own demise?