Side note about Jim - he had a pitch last week that I thought was more plausible than putting Tangled in that spot (based on the scuttle we've heard so far).
He suggested that they might use Frozen Ever After as the template. And, honestly, as best as I can figure, it would actually fit in the space behind Incredicoaster. (In the image here, I reversed the Frozen building to fit better - the entrance is on the top right.)
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Some of the comments we've heard so far suggested that Disney wasn't going to remove any of the backstage buildings, and this would meet that threshold. (If they did this, hopefully, they would build a larger queue, and they'd have space for it.)
And, weirdly, this week, Disney filed a permit for work along
Disneyland Drive that (at least for me) suggests that they're going to remove the Mickey sidewalk and push the park out towards the street.
I'm going waaaaay out on a limb by suggesting any of this, but this feels more likely to me. If they use Frozen as a template - have it start downstairs, climb to the afterlife, then a drop back to the real world. If the second "story" were two stories tall, they could make it feel a lot larger than what's at Frozen.
But, even if they did something like this - I still think they'd do a custom build rather than using the Frozen track layout as Jim was suggesting last week. (If I've got the dimensions right, there's room for an even larger ride building there.)
At minimum, a two-story attraction would give them a lot longer of a ride in a much smaller space.