If you believe there is going to be a better HTC WP8 Device then your probably right but to say that they will bring it out early next year, Well I think you might be disappointed.
HTC themselves have stated they have a WP8 model with a bigger screen coming out "soon." How soon is up for debate, of course.
Why would Microsoft bring out a update for WP to support a Quad-Core device straight after they have only just optimised it to use Dual-Core? I think you will be waiting until WP9.
Microsoft is a large software company with a lot of resources. They have great experience optimizing for multithreading. Their first update to WP7 happened within 6 months of the OS release, don't see why the same can't happen with WP8.
And if your idea of a flagship is having a bigger but less usable screen and a processor which will not give any noticeable performance and infact might drain the battery quicker then I would rather stick with my Non Flagship 8X.
Screen and processor are not the only benchmarks. As I stated before, there are a number of premium features that the 8X are missing or is underspec'd in. That is not to say its not a great phone - it sounds like it is quite balanced.
By the way HTC Flagship phones have a X in them like the One X and One X +.
Microsoft was heavily involved in the marketing of this phone. What sense would it make to market a $199 phone as a "midrange" model when the high end won't be out for 4-6 months after it is released, and also with Verizon then having no flagship at all at launch? A lot of people would wait for the "flagship," just like a lot are passing on the Nokia 822 and waiting for the 920. Plus, Verizon might experience poor launch sales (opposite of what MS wants) until a "flagship" is available.
Your pretty much basing your whole "theory" around the fact that the 8X only has 16GB well the New Nexus 4 only has 16GB and the best selling iPhone is the 16GB model.
16GB is really no longer enough for these phones if you are a power user. That is why Apple offers 32gb and 64gb versions of their phones, and there are android phones that have potentially up to 100gb in space.
How do I know this? I have owned a 16GB HTC Trophy with Windows Phone 7 for 2 years. Just with my WP7 apps alone, I am approaching the max space constraints. How could I possibly believe that with WP8's increased power and new round of apps that I will not grossly go over the 16gb I have nearly filled in the next 2 years? It makes no sense.
So yes, the 16GB on this phone is a big deal-killer for me on this phone on many others. It may be enough for TODAY, but looking ahead a year from now you may be wishing you waited for a 32gb+ model or one with a microsd slot. This is why I cannot envision this phone as a flagship, the storage space will cripple it over time as apps get larger and you get more of them.
I am not trying to talk trash about this phone, but I do think we got a midrange model that was tweaked and propped up as a high end model. It is missing some of the signature high end features that even the WP7 phones of 2012 had (nevermind WP8) and does not have the storage space capabilities of a high end device.
This phone may do most people wonders, and it has been my primary recommendation to those who need a phone now. But if you are into getting a lot of games/apps and maybe want to throw some media on too this phone simply is not going to cut it for the next 2 years. If you buy phones off contract frequently and don't mind selling this when the space becomes problematic or if you are a casual user, then that is a different story.
If they took this same phone, upped the screen size to 4.5"-4.8", added a microsd slot and a gyro, I would buy it instantly even for $299. Hopefully we'll get more news out of HTC soon about their flagship "Zenith" model and its release date.