I believe it really will be a 7W processor because they dramatically reduced TJmax for SDP versus TDP, that will cut the leakage power losses by a significant amount.
(can't find the specific numbers right now but I think I read somewhere the TJmax for SDP settings was around 50C or 55C)
Tjmax goes from 100C to 85C.
So that does indicate there is a relevance.
If you ask me, I would guess they are simply disabling Turbo Boost on both CPU and the GPU core to achieve it. Remember since Turbo Boost 2.0 on Sandy Bridge, Turbo is made to use the "thermal headroom" that isn't normally used by typical applications.
On Penryn chips, 25W chip may use maybe ~20W in most applications. Turbo Boost would mean it would use the 5W difference for that application for enhanced performance.
I think that also explains the Intel claim that ULT GT3 Haswell parts achieve Ivy Bridge GT2 17W 3D performance at half the TDP. Since for 3D, the iGPU takes up bigger portion of the power, it needs to cut MORE than half to achieve half the TDP.
Going from a ~1GHz sustained 16 EU to 350-400MHz Turbo-less 40 EU would be roughly equal in performance, and CPU part savings are achieved by simply running at base frequencies.