I think Japan as a Springfield and MIB/Springfield expansion pad replacement/addition would work, but an entire Hello Kitty area with an E-ticket, flat ride and several dining locations (can't see the FFB/Duff area being removed entirely given the revenue they bring in?) would be overkill IMO.
An urban Japan setting (mixed with fantasy/sci-fi, of course) would be a better long-term decision on Universal's part since it won't be limited to one niche female-centric franchise.
A good Japan-based area might be:
Hello Kitty play area, store and 2 flat rides (carousel and balloon race) in part of Springfield expansion pad
Godzilla E-ticket in rest of expansion pad
Pokémon replaces Springfield (Simpsons Ride torn down for 10-minute, classic-style family dark ride), new Twirl n' Hurl style flat with various flying/legendary Pokémon added
New path to SNW built behind Pokémon dark ride (themed as a Mt. Moon walkthrough with interactive Pokémon encounters and Team Rocket mini-shows)