I think that'd be a terrible idea for 5 reasons:
1. Battery size is fixed unless the device size is increased.
2. It's a step back in technology to lose USB-C
3. Losing IP68 sucks
4. If started today it'd release after the Note 8 or whatever they'd call it
5. The Note name would not help with sales
It'd be much cheaper and faster for them to just find a way to add s-pen functionality to the S7 Edge and sell that.
Samsung should put Note 5 back in production, give it SD Card storage, a chip and battery from S7 line. Drop USB-C for now and iris scanner and rebrand it the Note 6 at a lower price than the 850+ Note 7, like 650 700 ish. I myself would buy it.