Well, the orignal plan for MK had a two level attraction where Big Thunder now sits and the water table is not why it wasn't built. Further, Pirates goes down to the first level, so I'd say it would be doable.
The problem I have with this rumor is that some of the rides in TDS are basically the same as rides in Fantasyland already. Does Magic Kingdom really need two teacups rides?
It would be much more effective in AK or MGM to me.
Of course, where TDS really goes out of it's way to make that area impressive, I'm worried that stateside it will become Flik's fun fair with fish.
Personally, I'd rather see another mountain in that location. I've always liked the Villian mountain idea. Oh well, just another on my list of things to do when I'm in charge.