I think adding the forbidden forest would be an excellent idea. As an avid fan of Harry Potter, I was slightly disappointed with the scale of Hogsmeade and the whole Potter land in general.
First: I would removed the Dragon Challenge rollercoaster. It is a great ride, but now that the trains don't duel anymore, it's pretty pointless to have a dueling coaster. The area beneath the coaster doubles or triples the size of the village itself. Hogsmeade is made up of more than one street in the film. Adding a second street with more shops would help free up some of the cramped pathways within the village. Connect it on the back of the owlery so the land turns into a v-shape instead of a straight path. Line the paths with more intimate shops to further enhance the whole land. At the end of the path add a Shrieking Shack haunted walk-through attractions. Actually making the building sway side-to-side as in the real film would be an amazing effect.
Second: Build an actual forbidden forest expansion behind Hogsmeade and Flight of the Hippogriff. There are many ride options I have heard people discuss such as the Flying Ford Angelina coaster, Whomping Willow swing ride, etc. BUT, I would add another Coaster/Dark Ride combo. I know they are already building the Gringott's Bank Coaster. However, the Gringott's Coaster is rumored to be slightly slower with more emphasis on the dark ride portions. I would make this strictly a race through the dark forest. Voldemort himself would play a part in this ride, along with the centaur's, unicorns, and other magical creatures and plants. Unlike the forest in the Forbidden Journey which is almost pitch black, much more would be visible along this ride. It would be along the lines of, your taking a tour of the forbidden forest to see the many magical creatures. You run into Voldemort and must escape. Now you race back to the forest edge with the help of Firenze the centaur.
Third: Another exploration area in the forest could be created similar to Camp Jurassic. Adding special effects throughout the play area would greatly enhance the whole exploration/play area. Also, an interactive game using wands, ala Magiquest, could be incorporated into the forest and Hogsmeade expansion. It could slowly permeate it's way through the rest of the land over time. Sorcerer's has been a huge success for Magic Kingdom so Uni should jump on the interactive game bandwagon.
Fourth: Extra land would be left behind the forest. Either Universal could build another attraction for the Lost Continent via a very long underground queue bypassing all the said expansions, or running along the side of the forest. OR, Universal could build a Harry Potter themed hotel with access to the park between Hogwarts and Flight of the Hippogriff.
The Forbidden forest is mentioned in almost every Harry Potter book and is a quintessential part of the book. Especially since it surrounds the entire Hogwarts Castle and Village of Hogsmeade.