Well, AMD is the reason Intel couldn't force their nonsense architectures on us
IMO it has much more to do with the Core (2) architecture (that reached much higher performance even at measly 2.5-3.5 Ghz) rather than AMD.
Tejas was cancelled in May 2014 (after tapeout, so they knew the initial perfomance of it). The same month
mobile Dothan chips were released that could reach 2.26 Ghz on 90nm process @ 27W TDP:
Browse Intel product information for Intel® Core™ processors, Intel® Xeon® processors, Intel® Arc™ graphics and more.
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65nm Dothan (original Core Duo) was released in January 2006 and Conroe's Anandtech preview was published in March 2006. Here is a small recap:
In May 2005. This is how a dual-core 2.4 Ghz A64 X2 performed against a dual-core 3.2 Ghz Prescott (that was
supposed to reach 6 Ghz) at a 25% clock deficit.
Full review
In April 2006, this is how a previewed Core 2 duo (Conroe) absolutely decimating the same A64 chip at rendering (at lower clock speed):
Link to preview
Finally here is
The full review of Core 2 duo in July 2006.
Notice how Pentium needed 3.8 GHz to beat AMD at 2.8 GHz (35% higher clocks) in encoding. And encoding was the best case scenario for Pentium, as it had decent SSE support. Rendering and particularly gaming fared way worse (just see the review).
Against Conroe, Prescott (Simthfield) had 51% more IPC in this test. And again, that's Pentiums best case. In
Cinebench 1T for instance Conroe had nearly twice the IPC (96% more!).
Oh, and btw, this is the gaming performance:
Now, 3.8 Ghz was the maximum actually squeezed out of Prescott (that was supposed to go to 6 Ghz) and it was a near brick-wall from there on. Conroe was sold up to 3.2 Ghz stock, but could also reach
up to 4 GHz when overclocked.
So even a 7Ghz Prescott (let alone a newer even longer pipeline design) would not have outperformed a ~3.8Ghz Conroe in a lot of tasks. And 3.6-3.8 would definitely have been doable, had Intel had any competition.
As we mentioned Conroe didn't come out of the blue It was the direct successor of the Pentium M line already shipping since 2003 (Banias, Dothan ,Yonah). Considering how long validation takes, Intel definitely knew in 2004 the ballpark-performance of Dothan's successor's desktop version (Conroe). It would have been a no-brainer even if it never got past 3 GHz on it's first implementation.
TL;DR
Intel already had chips working in the lab, that could beat any of that 7Ghz design's reasonable performance estimates. That's why they cancelled it. Not due to anything AMD did.