Had the characters just been dolls, and no other toy counterparts or music from the movies playing as well, then I feel just character dolls such as Peter Pan, Wendy, etc would have been fine, blended in, and drawn less attention to them than they do now. The Disney dolls and the "I Spy" game that has ensued draws attention not to the children of the world, but to more Disney franchises now advertised in the attraction. I've never seen children who are older than 3, not get excited on the WDW version and point to the different dolls costumes while their parents tell them where we are sailing through. At Disneyland this has turned into a focus for the average guest to look for the Disney character "LOOK THERE'S DONALD!" while they ignore the rest of the dolls and toys. The ride is timeless, it is forever relevant, and from my many trips on small world in WDW, other than the 10-13 year old who felt awkward being caught on that ride, I know of no young children who were not engaged with the ride because it didn't have Disney characters in it.
As for all the other upgrades Disneyland got. I love the new trough, boats, lighting, music, paint, etc. All great enhancements that ADD to the attraction and don't TURN it into an I Spy game of Disney character franchises.
As for the Mary Blair concept, there is no conspiracy. The attraction was rushed to get to New York and condensed into an already bought size of land. When it came to Disneyland, they were able to expand it out to what they had originally intended. The thing is, the rainforest was originally in Brazil and the floorspace for it is still there. They just moved it to the curved room between the Poly and Finale scenes....essentially the room reserved for the America scene was instead turned into an expanded rainforest scene. What they should have done was send the rainforest scene back it's original spot in Brazil rather than condensing it into the Poly room.