This is just my guess, based on nothing other than what seems logical to me.
Echo lake stays as-is. Star Wars land gets a proper transition barrier from the Hollywood theme (something like modest transitional hills or Hollywood facades that span the area between what is now 50s Prime Time and Indy). Most of the backstage and show buildings of Star Wars are built in what's now the parking lot (and the current entry road gets re-routed around these as needed), with the on-stage areas for guests will replace Indy, the Backlot Express, and the area between them. It would allow Star Tours to be integrated into the land, and even allow for the queue to be rerouted so that the entrance to the attraction would be from within Star Wars land itself.
They could also possibly keep Indy (for a new show?), and just push Star Wars land farther into the parking lot (there's plenty of room for that), which would also eliminate some of the need for a transitional "wall."
This blueprint leaves the entire LMA and backlot area (Catastrophe Canyon) as the perfect staging area for SW and Toy Story land construction, as well as having it free for potential future expansion. I think that's why they're getting rid of Catastrophe Canyon now, to prep for the construction of the two lands.
Again, nothing but guessing here, but it seems like this plan requires a minimal amount of demolition while also keeping a maximum amount of free space available for future expansion.
Here's a painstakingly crafted masterpiece, detailing what I'm envisioning. Yellow would be the barrier (either hills or building facades), blue is the on-stage area of Star Wars land, and white are the backstage buildings (show buildings, restaurant, whatever).
![swland.jpg swland.jpg](https://d3ofq03apmfb8c.cloudfront.net/data/attachments/126/126927-ce1649ca9168eb66ab80ef1b678a8100.jpg)