According to the report, the iPad 2 will compete with the Kindle Fire in the low-end market. The two new iPads, which we assume will be called iPad 3s, will continue with the same 9.7-inch screen as before, but come with double the resolution of prior iPads (2048 x 1536), allowing Apple to claim a "retina display." Dual-LED light bars will light the screen, for beter brightness.
The new iPad 3s will also sport high-capacity batteries offering about twice the mAh as current ones.
There are a number of things in the report which ring true, and some which have even been rumored previously: the A6 processor, the dual-LED light bars, the higher resolution. It's been suggested that Apple keep the iPad 2 around when the iPad 3 arrives, for just the reason given in the report: to compete with lower end models like the Kindle Fire, though it would be hard to see how Apple could reduce the price from $499 to $199 for the iPad 2, even if it cut internal storage to 8GB.
Amazon.com is fine with losing money on the Kindle Fire, as it's not just a device for the Internet retailer to sell; it's an introductory portal to the Amazon.com website and to Kindle e-books.
So, all that seems reasonable.
Second, iWorld is the renamed MacWorld. Since Apple decided to leave that trade show after the 2008 show, does it make sense that it would go back in 2012? Not really. Apple said then that in the New World Order that is journalists falling over themselves for any Apple press conference, there was no need for it to leverage someone else's trade show (which includes CES as well as MacWorld / iWorld).
So it's unclear that Apple cares enough about sheer MP to even bother with a 5MP and 8MP camera in the device. After all, the iPad models have sold less on specs, and more on what they can do, which is the magic of Apple marketing: focusing on what consumers understand instead of specs they don't, as Android ads tend to do.
Finally, January seems a little early. Most rumors, and there have been plenty already, have pointed to a February launch as more likely.
So, iWorld will be Apple-less again, and so will CES, and no, we won't be seeing an iPad 3 there, and certainly not two. An iPad 3 launch in February and release in March, right on track for the one year refresh? Now that seems very plausible.