When we were at MK in June, we saw Woody and Jessie at a spot near the Splash Mountain exit. They were fine there, but I kinda hope they don't bring a heavy Woody influence to the area. It's but a single aspect of Toy Story and I don't think of the American frontier when I think about that movie. I know Song of the South has nothing to do with it either, but so much of the story is told indoors that it doesn't seem out of place at all in the area.
I just think of classic Disney (Davy Crocket, Westward Ho) when I think of Frontierland -- not animated features set in the modern day (whether a central character is a cowboy or not!).
My thoughts are it would be more themed to Woody's Roundup than Toy Story in general. There's a lot of undefined elements they can work with in a Woody's Roundup section. Then entire 'Woody's Roundup' premise was that it was a show in the old west/frontier, including the Grand Canyon.
Anyway, it's just a thought, and one that I think would be executed quite well by Disney to add on around the tracks behind Rivers of America/Big Thunder Mountain. I know everyone wants rides, RIDES, MORE RIDES!!!! (and all E-tickets at that) but a mix of M&G, Character Dining (maybe even the old stage show they did in Frontierland at DL Golden Horseshoe), a 4D show, and two rides would be a very nice addition back there. Though not sure if $385M would be enough to do it all.
I also think that would maybe let them diversify the Pixar Place offerings at DHS a little, with a big Toy Story presence at MK (between this new section and the Buzz Lightyear attraction/M&G in Tomorrowland).