Fairly late in the Vietnam conflict (about 1970-71) the US Army started taking 4" Model 12 Airweight M&P revolvers for arming helicopter pilots and crews. I saw those with both square butts and round butts at that time (probably a concession made to facilitate production within contract times). So I am sure that S&W could do a round butt Model 12 with 2" barrel easily enough. The only question is whether or not the market would support the investment and effort.
An earlier effort was the USAF "Air Crewman" revolver. 2" barrel, aluminum alloy frame and cylinder. As I recall those did not work out very well, most were destroyed and those that remain are very desirable collector pieces.