Toon Lagoon was dated upon its conception, but back in the day it was in a charming, throwback way. But now? Most kids nowadays have never even touched a newspaper. Everything about the comic strip alley doesn't appeal to anyone under the age of 20.
That's why I'd say, for a Toon Lagoon update, keep the general idea of the land, and the small peninsula with Popeye and Me Ship, The Olive, but remove Dudley, the Comic Strip Alley, and the Toon Lagoon theater. Replace Dudley with a SpongeBob submarine dark ride and have an accompanying Krusty Krab quick service spot. Change the Comic Strip Alley into a more general "Cartoon Alley" that throws together a lot of cartoon characters and colorful facades. Replace the Toon Lagoon theater with... whatever random DreamWorks property they want, although Madagascar would probably fit most if they're fitting into Toon Lagoon IMO.