That is the right road. Honda has the right idea for product: keep the line trim. Yes, Honda has the somewhat ridiculous Ridgeline, but otherwise, they keep it pretty simple.
When I see Tacoma, Tundra, FJ Cruiser, Venza, Highlander, 4-Runner, Sequoia, and RAV-4, I know it's coming apart somewhere.
Look at the car lines: Yaris, (HB and sedan) Corolla (sedan and Matrix), Camry and um, well, not much more. Sure, you could throw the Avalon on the list, but do they actually sell any of them?
I think:
Ditch the Tundra. Keep the Tacoma and trim the line to one body style. Throw out the Sequoia, 4-Runner and FJ Cruiser and make one "Land Cruiser" that is closer to the smaller gen of 4-Runner (the new is fat, fat, fat) and offer a cool diesel. Keep the RAV-4. Keep one of the Venza or Highlander.
So... my revised Toyota line
RAV-4
Venza
Land Cruiser
Tacoma
Yaris HB (why the sedan and Corolla sedan? Seems silly)
Corolla
Matrix
Camry
Engines? 1.5L for Yaris, 1.8L for Corolla/Matrix, 2.4L for Camry and Venza, 3.5L V-6 for Camry and Tacoma and Venza and Land Cruiser. 2.5-3.0L turbo diesel for Land Cruiser. Tacoma and Land Cruiser could share body on frame platform. Camry and Venza share platforms. Total platforms excluding Sienna and Prius? Four. Total engines excluding hybrids? Five.
Prius remains.
Sienna remains, but update and perhaps think of a "Prius" driveline? Otherwise use 2.4L and/or 3.5L from above.