With the given parametric expressions we have the derivative of the coordinates with respect to the parameter as
$$\left\{ \begin{aligned} x &= a \cos\theta \\
y &= b \sin\theta
\end{aligned}
\right. \quad \implies \left\{ \begin{aligned} \dot{x} &= -a \sin\theta \\
\dot{y} &= b \cos\theta
\end{aligned} \right. \qquad \text{where}~~ \dot{x} \equiv \frac{dx}{d\theta},~\dot{y} \equiv \frac{dy}{d\theta}~.$$
Thus the slope of the tangent line at point $P = (a\cos\theta, b\sin\theta)$ is
$$\frac{dy}{dx} = \frac{ \dot{y} }{ \dot{x} } = -\frac{ b\cos\theta}{a\sin\theta}~,$$
and the slope of the normal line is the negative inverse of that:
$$m \equiv -\left( \frac{dy}{dx} \right)^{-1} = \frac{ -\dot{x} }{ \dot{y} } = \frac{ a\sin\theta}{ b\cos\theta}~.$$
Note that here the parameter happens to be the polar angle, therefore $m$ is just the $\tan\theta$ (the slope of a normal line to a circle at $\theta$ angle) scaled by $\frac{a}b$.
The equation to the normal line is thus
$$ \frac{ y - b\sin\theta }{ x - a\cos\theta } = m = \frac{ a\sin\theta}{ b\cos\theta}~,$$
or equivalently
$$y - b \sin\theta = \frac{ a\sin\theta}{ b\cos\theta} (x - a\cos\theta)~ \tag*{Eq.(1)} $$
or to compare it with what is stated in the question post:
$$\frac{ y \cos\theta }a - \frac{ x \sin\theta }b = \frac{ b^2 - a^2}{ ab} \sin\theta \cos\theta ~.$$
Denote $(x_0, y_0)$ as the coordinates of point $N$, the intersection of the normal line with the major axis (which is also the $x$-axis). The $x$-coordinate is readily calculated with $\text{Eq.}\,\text{(1)}$ at $y_0 = 0$
\begin{align}
&& y_0 - b \sin\theta &= \frac{ a\sin\theta}{ b\cos\theta} (x_0 - a\cos\theta) \\
&\implies & \frac{ - b^2 }a \cos\theta &= x_0 - a\cos\theta \\
&\implies & x_0 &= \left( a - \frac{ b^2 }a \right) \cos\theta
\end{align}
Denoting $r \equiv a - \frac{ b^2 }a = \frac{ a^2 - b^2 }a $, we have the center of the line segment $\overline{PN}$ being at
$$ \left( \frac{ x + x_0}2 ~, \frac{ y + y_0}2\right) = \left( \frac{ a + r}2 \cos\theta ~, \frac{ b}2 \sin\theta\right) = \left( \frac{ 2a^2 - b^2}{ 2 a } \cos\theta ~, \frac{ b}2 \sin\theta\right) $$
At this point, we can identify the requested locus as an ellipse centere at the same origin and parametrized (necessarily) by the same parameter $\theta$ with the principle axes
$$a' \equiv \frac{ 2a^2 - b^2}{ 2 a} = a - \frac{b^2}{ 2a } ~~, ~~b' \equiv \frac{b}2$$
Further Discussion
Note that the ratio $\frac{ a' }{ b'} \neq \frac{a}b$. That is, the new ellipse is NOT similar to the original. Nor does the ratio equal to $\sqrt{ \frac{a}b }$ or $\frac{a^2}{ b^2}$ or anything particularly nice. What we can say about the shape is that this new ellipse (from the locus) is more "elongated" than the original. Consider the wide-and-short original ellipse where $a > b$, we have
$$ \frac{ a' }{ b'} = \frac{2a}b - \frac{b}a = \frac{a}b + \left( \frac{a}b - \frac{b}a \right) > \frac{a}b $$
where the larger ratio gives a more stretched out ellipse.
Also note that the locus goes "outside" of the original two foci,
$$a' > \sqrt{a^2 - b^2} \qquad \because (a')^2 = a^2 - b^2 + \frac{ b^4 }{ 4a^2 } > a^2 - b^2$$
with its own foci that are closer to the center.
$$(a')^2 - (b')^2 = a^2 - b^2 + \frac{ b^2}4 \left( \frac{ b^2 }{ a^2 } - 1\right) < a^2 - b^2$$
Best Answer
I think $x_1$ and $x_2$ are the co-ordinate axis . I am going by the following approach , which is a little long but this method works .
Seeing the $x_1x_2$ term I figured out that the principal axis of this curve are not perpendicular to the co-ordinate axes . Hence I supposed the equation of the curve of the form $$a(x+ty)^2+b(tx-y)^2=1$$
Now I have taken that the principal axes pass through the origin because there are no $x_1$ and $x_2$ term of single power . And the principal axes should be perpendicular to each other hence I have taken the slope of one to be $t$ and other to be $-\frac{1}{t}$ (the product of slopes of two perpendicular lines is equal to $-1$)
Now we are all set to go , expanding the above equation we will get ( work out the steps , I am writing the final result )
$$(a+bt^2)x_{1}^2+2t(a-b)x_1x_2+(at^2+b)x_{2}^2 = 1$$
Now reducing the original equation to this form you will get $$ \frac{6}{14}x_1^2-\frac{4}{14}x_1x_2+\frac{3}{14}x_2^2 =1 $$
Equating the co-efficients you will get $$a+bt^2 = \frac{6}{14}\ \ \ \ \ \ \ \ \ \ \ \ \ \cdots(1)$$ $$2t(a-b)=-\frac{4}{14}\ \ \ \ \ \ \cdots(2)$$ $$at^2+b=\frac{3}{14}\ \ \ \ \ \ \ \ \ \ \ \ \ \cdots(3)$$
Now subtract $(3)$ from $(1)$ you will get an equation in $(a-b)$ and $t$ . Using the $(2)$ equation put the value $(a-b)$ in terms of $t$ you will get an equation in $t$ , then use that value of $t$ in $(1)$ and $(2)$ to get $a$ and $b$ .
This way you get the value of $t$ hence the equation of principal axes and value of $a$ and $b$ come to be positive , hence it is an ellipse .