For me, the key for AMD is probably price more than performance - If it is a more powerful card, they will charge the premium for it. They don't need the outright top level performance, they need to be available for a greater proportion of gamers. People pushing 4K60fps plus are in a (growing) minority, but a solid 4k60fps in the majority of games, (there will always be outliers) at the mid range should be the target still for this gen, I think. Have the halo card aim higher, but if the 7700 is able to get there without ridiculous prices, they could be on to a winner.
I don't know why AMD wouldn't produce a killer in the mid-range. They can do it; they're not going to knock Nvidia off the top either. I'd be 100% aiming to take the market by targeting the majority in the middle.