Intel is going to look pretty silly when they are forced to bring back HT to fight a 7nm AMD. If the removal of HT from the i7 is true, then its a mistake IMO. If they are simply renaming all their i7's as i9's, that's also a huge mistake IMO. Why destroy your own brand like that? No brand is stronger than the i7, and trying to condition people to now consider the i7 as "second best" could backfire. Its confusing and kind of funny to watch actually. Big bad 8 core i7 without HT, LOL! That's funny right there.
16/32 7nm cannons about to direct their fire on Intel in the mainstream, at high clocks too...now THAT will be funny.
No one except enthusiast geeks cares about HT. Even my friends who are into gaming just assume i7 is 'better' because of the higher number, not because it has HT.
In a practical sense, i9 works if its the only SKUs that have HT. Intel also wants to charge more for the 8/16 chip, as jpineiro said, and $450 for a 'not so premium' i7 is probably a tough sell. For an i9? They can probably get away with it.
From a marketing perspective, this doesn't hurt Intel. From a competitive standpoint? Well, certainly a 9700K will lose some benchmarks to a 2700X but it will win some as well, so if its priced around $350 then its 'about right', especially considering the reported 4.6GHz-4.9GHz out of the box clockspeeds.
As far as 16c/32t on desktop goes, I'm struggling to see how a 16/32 chip would be beneficial to your typical desktop machine apart from niche cases. This 'moar cores' war is getting silly, I would honestly prefer a jump in IPC and clockspeeds from AMD, even if they remain at 8/16, rather than a doubling of cores ever 24 months at the cost of lower overall frequencies.