While John Gruber is likely right about the physical size and resolution for the screen (7.85”, 1024x768 px), I think the following is just plain wrong:
" … for developers, the iPad Mini acts just like an iPad 1 or 2: same number of pixels, just a little smaller physically. It’s not a new target."
You cannot make a touch interface that much smaller and still have it be easy to use. Text would be tiny and hard to read, buttons hard to hit.
UI elements are roughly the same size between iPhone and iPad. An iPad mini would have the same physical size elements to remain finger friendly, but with smaller screen real estate to put them on.
It would definitely have to be a new target, and apps would have to be designed specifically for it, just like you have to do different designs for iPad and iPhone.
iPad mini would obviously have more in common with iPad than iPhone though. I imagine apps could look roughly the same, but with less room for content.