It's not about mugging off their flagship. I know they're trying to maximise their profit above all else, just like every other company. I just think they'll make a lot of money if they can keep the Titan XP where it is for as long as possible.
To be fair, your probably right that even if they sell a much cheaper 1080 Ti with lower profit margins, the sheer volume of sales will more than make up for any potential losses from rendering the Titan XP obsolete. And they could very easily just release the 1080 Ti out of no where since it's extremely unlikely AMD will even come close to this type of performance with their next line up, so they don't need to be worried about responding at all like they have before.
But yeah, we'll just have to wait and see what happens.