I think the most practical way to preserve the Matterhorn as a park landmark while updating the ride system and experience to be more comfortable, reliable, safe, etc., is to add a modern coaster show building "plinth" structure wrapping around the south-to-east sides.
The original mountain would be largely gutted (preserving the exterior) and much of the coaster ride would be located within this 20,000+ sq. ft. show building.
This show building would be thematically dressed with rockwork like the Frozen show building at Tokyo DisneySea Fantasy Springs, and create a layered, forced perspective visual effect for the Matterhorn. (This is, it will make the mountain seem larger than it currently does). It could have waterfalls, etc., as well as "ice tunnels" where the walkways circulate around the mountain base, as well as for the Monorail.
The walkway behind Buzz Lightyear is an un-thematic back-stage space now so this new icy tunnel will be an improved transition to the Tomorrowland lagoon, possibly with a mountaineering S.E.A. theme (and maybe the Submarines could get an S.E.A. theme for an explorers/adventurers mini-land vibe). The new icy walkway around the lagoon could feature openings to see out onto the Submarines, and waterfalls could enhance the lagoon scenically.
Possibly the entry/queue could be moved into the base of the mountain, accessible from the ice tunnel behind Buzz Lightyear, freeing up the Fantasyland side for use in a future Autopia/Spaghetti Bowl replacement. (Thus the mountain itself would serve for queue/load/unload/lift).
While this may seem to some like a unfeasible project, we've seen Disney significantly modify Splash Mounting and the Hong Kong castle, as examples of working to preserve and update complex existing landmarks.
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