Hi Rich
I haven’t looked at the cameras or the housings, but generally, if Canon have two cameras that fit in the same housing, they don’t bother machining a new housing - there’s really no point in it for them. So, if there is a new (different) housing for the 850IS, I suspect it is because there is a difference in at least one control position, or some good reason why they designed a new housing.
All that said, it may be that the new housing has an additional control that is not present on the 700IS housing, and so the 850IS might fit in the same housing, so long as you don’t need / want that extra control. Unless someone here has specific experience of these housings, your best bet might well be to find a shop with the 850IS, take your 700IS housing along, and ask to put the 850IS in the housing to see if it will work.
hope that helps