I think there are ways to put over new talent very similar to this, but I'm not sure if going to the lengths you have suggested would work, if just for the fact the WWE would screw it up.
I think there could be some young vs. old stories for the WWE to use, though. If everything goes according to plan at WrestleMania, I'd hope John Cena and Edge will walk out of WrestleMania WWE and World Heavyweight Champions, both heels, and both pissing off The Undertaker and Shawn Michaels, respectively. The main event for Backlash will likely be John Cena and Edge vs. Shawn Michaels and The Undertaker, because we all know how big those tag team matches are, aye Vince?
I think John Cena vs. Shawn Michaels and Edge vs. The Undertaker and programs with potential, though. Cena as the young Corporate Champ Vince is trying to protect, and Shawn Michaels the veteran who doesn't believe his time is in the sun is over. If I were booking, Shawn Michaels would NEVER win the WWE Championship. He just wouldn't get there. Cena would be booked as too young, and quite frankly, too good for the aging Michaels.
On SmackDown!, we'd get videos reminding us of how Edge used to serve under The Undertaker as a member of the Ministry of Darkness, and Edge claims he's grown leaps and bounds as a competitor. He manages to defeat The Undertaker to prove his worth as World Heavyweight Champion.
I hope Mick Foley defeats Umaga for the Intercontinental Championship at WrestleMania. Umaga can then chase Foley, trying to prove he can best the Hardcore Legend. Foley challenges Umaga to some kind of "Death Match", just to make it sound more lethal than a "Street Fight", and at Backlash, Umaga proves his worth and bests the Intercontinental Champion and wins back his Title.
I'm trying to think of an old tag team the WWE has, but they don't really have any. Paul London & Brian Kendrick are two guys who need establishment, and badly. A program with Regal & Finlay was something I was at one stage looking forward to. I guess they can split it up into programs with Regal & Taylor (which they have already done) and Finlay & Booker. I think the later has potential to be a really interesting feud.
I don't think the money is in a big old vs. young feud, but I think separate programs where that seems to be the theme could work really well.