I would disagree with there being no market for large bore dual sports, the KLR has been one of Kawasaki's best selling motorcycles over the years and the recent update has sold very well. BMW's 650 thumpers have been popular and inspired BMW to come out with their new GS 800. Smaller bike companies like Triumph and Moto Guzzi see the market and both have alternatives to BMW's wildely sucessful GS models, though they are more adventure bike oriented.
I think many of the current L riders would jump at the opportunity to upgrade to a new model. To me Honda is missing out on a great opportunity to market a street legal version of the XR650R. Many R owners have modded their bike to make them street legal. Look at the sucess KTM and Husky have had with their dual sports.
The Transalp was a great bike poorly marketed, and today has a cult like following. I looked at one in Sherman, TX recently that was advertised on Cycletrader, they wanted $5,800 for it, and the dealer held firm on the price. With the Twin mill and all the plastic, it was more of an adventure bike than dual sport, but I think it still would work for me. Kawasaki should have put the 650 twin from the versys in the new KLR, that would be a sweet ride.