I think that Harley would do well to make a cafe-racer style bike. I think that would sell really well to the younger clientele that Harley are trying to on board. Other brands have been making bikes like that and they have been doing well, and I think a cafe racer bike would still match with Harley's brand.
They have, several times, and they were always sales flops. There was the XLCR Cafe Racer of 1977/78. Only lasted two model years (ok there were 9 1979 models made with left over parts). Then there was the XR-1000, another sporting Harley that lasted two model years and never took off. Next came the VRSCR Street Rod, a sporting V-Rod on a unique frame with more ride height, more rear suspension travel, upswept pipes, lots more cornering clearance, a male slider fork and genuinely good ride and handling. Harley made a couple of thousand in 2006 and only a little over 200 in 2007, then canceled it with left over 2006's lingering for years unsold.
Next up was the XR-1200. That one lasted four years. It is the best Sportster ever made, but look what survived, the 48, the 72 and the Dark Customs. Kludge! The XR was a genuinely good bike, but the tattoo and pierced everything crowd wouldn't bite, and the guys who drag their knees on corners wouldn't be caught dead in a Hardly Ableson dealership.
Even today I hear riders I know moan "why didn't Harley make a V-Rod model like the XR-1200?". They did. It was called the Street Rod. It is a fabulous bike but you missed it. Harley has a very tough time getting anyone to take a sporting Harley serious. I feel for them because deep inside they have people working there that dearly want to make and sell sporting iron, but they just can't get anyone to take their efforts seriously, and the dealers don't do them any favors either. It makes my head spin to see dealers slam and chrome a Street Rod to make it appeal to the barbarians, but that is the crap that happens.