I'm pretty sure one of the main reasons this was canned had to do with that area needing to remain backstage. The amount of food service personnel moving carts back and forth back there would just be bad show if open to the public during the day. Garbage being taken out, boxes coming in. This is a Cast Member area we're talking about.
Still wish we'd get a theater somewhere. Even if they routed an entrance through the existing "Town Square" theater facade on the right of Tony's, the park needs a general purpose theater and Main Street would've been a great place for it.
Or put it in Fantasyland. Just, don't take away my Philharmagic. Love that show.