It sort of already did work, remember, MK is built on the "second floor", at least the guest areas, and the swan boats traveled *under* guest walkways. So, in a way, half of this boat ride has already been built, they'd "just" need to dig out the walkway between Fantasyland and Tomorrowland, build a lot of bridges, (or one massive bridge with a cave like depicted above. They could have two stops, one where the old swan boat landing is, and one in Fantasyland, or they could add Storybookland canal boat type features to where the old Swan boat water way is.
If you remember the old Swan boat ride, you definitely felt like you were down in a grassy "ditch", so much so that you didn't see out of the boat much to Main Street, but mostly saw the plants and stuff b/c that is what was at eye level.
So of course, expanding the Swan Boat moat to FLE would not have been impossible . . .