They need to keep Hippogriff. It is the only ride a kid under 4/5 can do in Hogsmeade or DA. The 36" Height Requirement is also one of the few toddler friendly ride in both parks together- and toddlers parents buy them wands, robes, and butterbeer too. I think the idea of moving it would be brilliant.
-Drop Dragon Challenge and replace with a forbidden forest ride and shrieking shack queue.
-Add a Great Hall Table Service Restaurant in the back off the castle (near exit shop). Heck- this would even be a perfect time to reconfigure all that space- lockers and gift shop bottlenecks- entrance to ride and entrance can both be in same spot.
-Add both fireworks viewing area as
@ConvolutedFrippery drew.
-Rebuild Hippogriff similar to Hulk (brand new ride) where DCs indoor Queue is now.
Dragon Challenge takes up SO MUCH space- that by simply dropping that one ride, you could add another dark ride, viewing area for fireworks, great hall restaurant, and fix all the bottlenecks associated with FJ as well as fixing sightlines of the Hogwarts Express. Great Hall alone would pay for that project...