I'm just trying to imagine if the district actually had been dissolved. Ignoring the massive debt burden that Orange and Osceola would have had to deal with, the whole thing would have happened without a transition period. Emergency services switch to Orange/Osceola Fire and EMS, permitting goes to those respective counties, and eventually, some new limited districts are established on WDW by both counties but they wouldn't have the same abilities/powers as a state-backed district.
The state could have done it, but the fallout would have been yucky for the counties and that's putting it mildly.