I have a very good feeling that the RS5 will be with us in 2008 and will be running the current RS4 engine with a few tweaks.
All the signs are pointing to a launch a lot sooner than current offerings.
Think about it, the last S4 and M3 were equal on power but this time round the M3 will be up to 70hp more powerful, why would Audi launch the S5 now if it was not changing it's role in the range from the rival and alternative to the M3 to the now rival and alternative to the 335i. The S5 will be no more than £40K tops but will quite possible be no higher than £38K while the 335i M/Sport will be priced at £35~36K. The M3 has been indicated as costing as much as £48K a possible £10K price difference, the two models are no longer competing for the same customers where as a RS5 at £52 will be a direct rival in power and price bracket.
This paves the way for the RS5 to enter a lot sooner into the market place and complete directly with the M3 instead of above it where it has previously been. This is possible because the basics are already there like the engine. Small tweaks like the ones the S5 received will give the RS5 a smaller power hike lifting the output to the 435~440hp bracket giving it a small edge over the M3 and justifying it higher price. There is yet no DSG gearbox and no trick suspension both of which have been talked about. The gearbox I believe will be launched with the A4 and introduced as a option on both models offering 7 gears, the suspension option will be either magnetic ride or air, I personally prefer the former as it's more in keeping with a sporty ride. Two things that will be standard and can transform the RS5 into a hell of a quick and capable car even with such a small power increase over the RS4.
If the S5 can drop 0.5s from that of the S4 with a small 10hp increase than a like wise increase combined with DSG 7speed will drop the already amazing 4.7s official time to a more amazing 4.3s and keep the RS5 ahead of the up and coming M3. If BMW does introduce a CSL model then a RS5+ with valvelift would give it the extra power to compete and the suspension is inplace to be tuned to match it's handling capabilities.