The idea of a LS7 is a nice one. As far as worrying about the challengers extra 35 horse power, those horses are probably more than taken care of by the extra weight. That thing is a pig!
Between then and now, I also expect to see a new engine out to replace or complement the LS2. Right now, GM has the L92 in the Escalades, which is a 6.2L all aluminum block with heads that borrow design elements from the LS7 Heads. The flow on these things is HUGE. Due to the revised port design (no more cathedral ports!) a new intake had to be created, and right now, the only one available is a butt ugly truck intake, but I hear that a low profile car intake is in the works and will be out shortly. Rumor is that a 6.2L variant of the L92 will be powering the 2008 Corvette. Think 435 - 450 hp. Slap the GM "Hot Cam" version of the LS7 cam in and you should be good for 550 plus. Sick, ain't it?