a 7 seat elipse is only about 18-19% more cross section than an A320 for 16.6% more seats in Y -
I don't think a true eclipse will work. But now you are comparing a 7AB oval to a 6AB circle. True you may be able to match the cross section area per seat. This would allow for per seat fuel costs to potentially match the A321 if the range requirements were equal. However once you add 1000+ nm extra range to the MOM the weights go up. It can then no longer match the short range CASM of the A321. This is a critical goal of the program. The biggest market for Boeing is to get airlines to upgauge their narrowbody network. This will hit the larger A321 much harder than the 737.
You should compare an oval 7AB to an oval 8AB. The 8AB has less cross section per passenger. In fact 8AB oval now beats the 737 and A320 families. Now that allows rooms for the extra range to be added.
As well the A320 is about 3-4% more cross section than 737 and it doesn't seem to hurt it that much.
Actually that is the 737's only advantage and the only reason it is still competitive. People know the A320 has bigger engines and a better wing. That Boeing is limited to smaller diameter engines but the smaller, lighter frame makes up for it.
You may also find that there is not enough luggage capacity with 8W and LD3-45's. 7W might be too much but you would have extra length (versus same capacity 8W) to hold a few more containers.
Actually the A321LR has 3 of the 10 container positions filled with fuel tanks. Its also very limited on payload weight when running long range flights.
So an equal cabin length 797-8 would have 10 container positions available. That is 43% extra cargo space than a A321LR using small LD3-45's. The 797-8 being 8 abreast has 33% more seats. So the shortest 797-8 actually has more cargo space per passenger than the A321LR.
The 797 stretch models would have even more cargo space per passenger. Boeing could even design a new container an LD3-45 but without the angles on the bottom. This would also allow for LD8 pallets to fit perfectly.
Boeing might decide that the weight penalties for an oval can't work. A circular fuselage means 8 abreast is a definitely. A foot narrower and shorter than the A330 with slightly narrower LD2 containers.