I don't really see how pushing 10-inch netbooks downmarker will fend off ARM based systems. Firstly ARM-based motherboards will be cheaper anyway as they will require less components (ARM SoCs tend to be highly intergrated, more so than Intel's current offerings, as far as I can tell).
What's more, there are already several off-the-shelf ARM SoCs capable of driving HD displays with decent 3D acceleration on top of that (e.g TI's OMAP3 and OMAP4 Cortex-A8/A9 based families), so that's not a barrier either.
Because ARM-based systems draw less power than Atom-based systems, manufacturers can either advertise longer-battery life, or match that of Atom-based systems and save money by using smaller batteries.
I don't think the move to 12in has anything to do with fending off ARM. Its not clear what benefit manufacturers would get from doing that anyway. The only company to gain from fending off any ARM based system is Intel.