Well I haven't seen the updated one but it was a crowd favorite and the new version seems to get decent numbers too. My point is that there are a handful of lesser-attended/received attractions down in the KidZone that are dying to be replaced and that would give them a bigger footprint to work with. Sad about Disaster though.
USO doesn't want to get rid of the KidZone. Update it, retheme it, overhaul it, but they want that family/kid-friendly area to remain in the park to give something to that demographic. If they tore most of it down and replaced it with another thrill ride, it would give the wrong message, especially since Universal seems to be trying to balance out the range of experiences in their parks to keep families with kids of all ages in the parks. I don't think there are many play areas in USO, especially in Universal Studios, where mom & dad (or the whole family) can take a breather and watch while the kids are safe doing their thing without need for a ride-along companion. (It's interesting, looking at my local amusement park's recent focus on more family friendly attractions & areas, including straight out playground/waterplay areas that feature no rides, just a large playground space for kids to go crazy in and blow off some steam, along with family quick-service dining close by--they've had a lot of success and the response from families has been all-over positive. I think USO would do well reworking Kidzone to feature both rides and a central play/recreation area like this, even if it doesn't pull crowd numbers like, say, The Mummy, because it never will, and it's not meant to, and that is how it should be--but that's not the point in this post here, either.
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The ride doesn't necessarily have to have a huge footprint to be great. Nor does it have to use trams to work within the footprint it might have if they use the Beetlejuice/Disaster area. The backlot tour, being what it is, has different pre-show and ride segment requirements than a freestanding ride does. Cutting those out, as well as the fairly straight path the trams have to take through the backlot area, would still leave plenty of opportunity within the freestanding USO ride to build on it and make it better--that 30% Mad Dog was talking about. I haven't heard any rumors that Universal is putting a rush on an F&F attraction for Orlando, so they'd have time to play around a bit with a freestanding attraction to make it different from the Hollywood backlot version.