I think we are not the only ones confused... dependent on which review you read it is either mid range, entry level or a combination of the two!
Canon say it is not a 450d replacement but sits just above it and below the 50d.
It looked to me like a slightly tweaked 450d with HD capability but from a personal perspective HD in an SLR would be of no interest to me due to limitations. The 500D only shoots at 20FPS at 1080 anyhow.
Given the choice with prices similar I would go for the 50D every time as the CMOS has tweaks, better build quality, higher burst rate and better RAW buffer. At getting on for double a 450D you have to really want HD capability, prices will inevitably fall but I really don't see that sales on this will be huge given the models just above and below.
It could have more to do with Nikon's latest launch than any common sense with their range.
But as Simon said we don't run Canon