BUT ... in the early 1960s, Western Electric did come out with a
> rotary dial "slim" wall telephone, the same shape and size as the
> "slim" standard touchtone wall telephone. Notice how this "slim"
> wall telephone is roughly the same dimensions as a Princess desk
> telephone! It might have been that Western Electric originally
> intended this as a Princess wall telephone?
Nope. Didn't happen. WECO always had the big boxy rotary dial wall phone with the number/letter ring outside the finger wheel with the standard two-gong "classic" ringer. Stromberg-Carlson made "mini-wall" phones with rotary dial that had the numbers/letters inside the finger wheel with a small single gong ringer the same as you have with a "Princess" WECO or "Cinderella" ITT phone. WECO, ITT and Stromberg-Carlson had DTMF "touch-tone" versions of the mini-wall. I believe however that Stromberg-Carlson was the only company that made mini-wall versions of rotary dial wall phones.
As for Bell Canada with their "Northern Electric" sets they had touch-tone with the big boxy wall phones with the same shell as the
554 sets with a DTMF pad in the center that fit the space a regular rotary dial would occupy. They also had early touch-tone sets that had the same body as the 500 dial phones but also had a touch-tone pad where the dial would normally be.