I think a large re-working of this area is necessary. ALthough it is logistically difficult, I would love to see the following:
1. Build a smaller C-ticket dark ride ala Dream Flight themed to Clara Belle - CLara's "Blue Ribbon Tour" and the cows premised on a wacky 4-H county fair with various characters presenting their grown goods or themselves (i.e. 3 little pigs representing themselves in the pig competition).
2. Next to this attraction is a large red-barn-looking covered bridge that serves as the link to Fantasyland. It also has small expo booths selling oddities, fair food, etc. along either side (to block the view of the current backstage areas of the tents). This actually rises up so that the roadway can stay where it is (running under the covered bridge and queue for the Blue Ribbon Tour.
3. The other side is a more country themed bridge with dark woods and covered in moss. To your right built into a hillside is the queue for Mr. Toad's Country Ride. This is a souped up version of the old attraction that changes the path. You queue through the English countryside and board your cars. Much more like Spidey or TDL's Pooh than a traditional Fantasyland ride, this is one wacky and wild trip. Of course, you now take one of two paths (gypsies or farm) and eventually approach Toad Manor and enter. The scenes are generally the same in concept but the additional space available allows the scenes to be larger and the effects are updated.
4. Gaston's will be a dinner show build next to/behind Pooh's Playful Spot. It features basically the scene from the broadway show and a Festhaus-like dining experience.
5. The Speedway becomes the Sunday Car-TOON Drive. The queue is moved to Pete's Garage and replica's of many toon homes (aside from those already existing so Chip & Dale, Lilo& Stitch, etc.) line the route. They have small elements that talk, move, explode (see Stitch), etc. The cars are rethemed to look more like family sedans (or even the "Cars" or other toon Cars).
6. The Show Stopper: Dark Mountain. This is pretty much the concept from before of the water-coaster hybrid. It will take place inside and outside the berm (most of the mountain outside, but the queue is inside - you dip under the tracks via the ride itself similar to BTMRR). There are rocky crags all around, but the twisted mountain itself sits more to the west so that the viewpoint of the castle is not changed from Main St. USA.
I know that is confusing, but I popped up a quick paint sketch in my photoalbum.
EDIT: Link to the album.
http://photoalbums.wdwmagic.com/showgallery.php?cat=3368&ppuser=12707
Thanks for indulging!