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http://www.paywallnews.com/business/Boeing%E2%80%99s-Next-Airliner-Might-Fly-Investors-Into-Turbulence-.HJbeDJ5U7M.html
This article would indicate that the 797 would be a truncated 787 which would mean many of the development costs and technology have already been developed ....essentially it would not be a new airplane.
If one were to think this through Boeing's competitors in not just Airbus, but their own 757 which continues to provide yeoman service to that market segment. The new aircraft will have to show significant economies considering the 757 fleets are already capitalized in order for the market to buy them as replacements. There will also have to be a significant additional market for this 787-500.