I thought the initial plan budgeted for an expansion. The issues from my understanding was always an inflated design budget (how grand is this new Gran Fiesta going to be?) and how best to increase/improve capacity*. There's also a point where value-engineering an IP into an attraction is longer justified. With Frozenstrom it was justified because it brought guests to the park. With Coco, I'm not sure TDO sees that same worth and potential. The "Would adding IP truly add anything?" logic. Short-sighted, penny pincher based logic.
Being such an obvious choice for IP integration however, a "Gran Fiesta de Muertos" style ride staring Miguel would definitely be appropriate for the Mexico Pavilion. It should have been greenlit! Period. I'm hopeful they'll reconsider and find a budget that works so we get a good overlay with improved guest capacity and throughput. And while we may joke about Gift Shops at exits... this is one attraction that would heavily benefit from that established standard, IMO. Unfortunately, I suspect nothing will happen until TDO and Imagineering can settle on something both parties are happy with -- a net-gain justifiable improvement.