The facts all point toward one thing you missed in your post, which I previously suspected couldn't possibly be true.

Fact: MS is price slashing on current X360 models, especially the Arcade version.
Possible reason: clear inventory, and especially create a vacuum for the available HDD addons in stock with the Arcade model push.

Fact: MS has stated that they really want to get into 100% digital distribution.
Possible reason: Money. Only... not all 360s have a HDD... yet.

Fact: MS has announced that they view Sony as their main competitor.
Possible reason: They intend to compete with Sony for the HD market, because...

Fact: MS has noted that "75% of all console sold in the last generation were sold in the $199 price range". Actually, this is something of a bit of misinformation. However, the truth is that the majority of Sony's hugely successful PS2s were indeed sold at this price point, and those units shared something else in common, but different from the original PS2 models -- not just a $199 price point.

Fact: MS has built a 65nm/65nm CPU/GPU console, which is rumored to be much cooler and much lower power requirements than its predecessors.
Fact: ...no one has ever spotted one, even though they supposedly went into production in August of this year. Not too unusual, since it usually takes... oh say until the middle-late period of the following months for inventories to clear enough to make room for new models.  Say the 25th of Sept. in this case.

Fact: Rumors for the price cuts have come out easily... almost too easily.  

Assertion: ...as if they were being seeded.  And why not?  Generating excitement is great for clearing inventory -- as long as you don't spill the beans on the real reason why the inventory is being cleared out.

Assertion: People don't like to buy the "old" when the "new" is sitting next to it, for the same price.
Assertion: Get rid of the old with price cuts, to make room for the more appealing new. Otherwise you have a lot of leftover junk no one will buy.
Fact: A HDD is required for serious digital distribution to work.

Rumor: MS is "relaunching" the 360 on the 25th, with a whole bunch of spiffy online goodies.

Assertion: My making free stuff available online, you not online sell your new HDD product, but also get people to buy those leftover external HDDs you no longer have use for because...

My own speculation:

The new slimline X360, with a built-in HDD will be on its way to your local store in the next couple weeks. What better to assault Sony with for the holiday season, than a slimline X360 priced well below the PS3? The slimline PS2 practically flew off store shelves when it arrived.. and MS knows it.

Go on.  laugh now.  It's just speculation. =)