This is - naturally - all subject to heavy speculation...
MZ always made very poor PR work (to my knowledge, there's only one guy doing both customer service and PR), so taking the 660s from the site does not have to mean anything. Maybe the PR guy doesn't even know about the web site changes...
However, smash is probably right about the competition issue. Another important issue is emisson. The old 660 engine won't be able to meet upcoming emission standards without heavy modifications. If Yamaha refuses to sell the new engine to MZ (which they probably will do - as they already did with the WR engine), MZ needs a new engine for Baghira & Co.
Where from? Suzuki? Wow, should not be too difficult to build a bike around the TL V-engine that weighs less than the KTM LC8 monster. Would be nice, wouldn't it
?
Develop a new engine on their own? Very expensive, so they need lots of money. If the 1000 is a success, they might have enough money, but on the other hand, they might decide to drop the big-one-cylinder line in favour of the 1000...
I am not too optimisitic about a Baghira successor.
Cheers
Markus