The 7700s is maybe 5-10% slower than a desktop 6600, so the 7x40 is not going to bottleneck it. The CPU’s biggest gaming weakness is the low L3 cache but otherwise it should keep pace with non-X3D CPUs in the 5600x-5800x and 7600x-7700x ranges (again, the low cache will be a factor for frame pacing/1% lows).
16GB would allow the 7700s to age better and run games with higher quality textures and less stuttering, regardless of raw GPU horsepower. That would have been a clear win for it over the competition. 16GB would also be nice for basic LLM/AI- style tasks and development. That would have been another win (even with unofficial ROCm support). As it stands now, Raster, RT, FrameGen, and DLSS/FSR Upscaling are all better on comparable NV offerings, with the same 8GB limitations.
AMD’s mobile GPU lineup is limited - they essentially had 4 GPUs that were +/- 10% of the 7700s and then (later) a big leap up to the 7900m. The 7700s was probably the best choice (higher CU count, lower clocks and thus better performance/watt) so I don’t blame FW for choosing it. And there are AMD advantages, especially on Linux.
Heat management in laptops is a thing, as it weight, size, and battery life. However, consider that the majority of us slap a case on our slim cell phones the minute we buy it. I believe that some of use would be willing to add some thickness to our laptops to improve cooling and noise. Many of us use raised stands or laptop cooling pads. Obviously FW doesn’t have large marketshare, and the subset of FW16 owners with the dGPU is smaller still, but I think offering a replacement dGPU chasis that allows for larger fans to improve cooling and lower noise would be a great upgrade and offer a benefit that cannot be found elsewhere.
Regarding ARC A770m, the reason it has 16GB of VRAM is that it runs on a 256-bit bus, just like the 4090m and 7900m. The upcoming 7800m runs on a 192-bit bus and hence it has 12GB. GPUs like the 7700s and 4070m have 8GB because they are on a 128-bit bus. 128-bit cards can have 16GB (see the 7600XT and 4060 TI 16GB) but require memory modules on both sides of the PCB which is easier to do on a desktop GPU with a backplate on and no real size constraints. I imagine for a laptop that is a bigger issue.