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It would work under the proper circumstances.
First of all, it could never happen on RAW. Rey Mysterio vs. Triple H is ridiculous and a Mysterio victory is impossible.
But on Smackdown, it's very likely and could be believable. It all depends on his opponents. A champion Rey Mysterio could feud with Kurt Angle, Eddie Guerrero, or John Cena. He has to wrestle guys who aren't considered "huge" (like Batista, Big Show, and Heidenreich are "huge"), and they have to be guys who can go with him in the ring. Rey works a very fast, very athletic style, and a feud against Big Show or JBL would be utterly boring and ridiculous.
Playing him up to be the ultimate underdog Champion would be perfect. Mysterio picks up a huge Title victory on PPV, and the next TV show his opponent plays it off as a complete fluke. Mysterio fights all of his opponents, and doesn't win in lame fashions (like the Kevin Nash victory, or the low-blow victory over Rick Norton in WCW). He always goes toe-to-toe with his opponents, and the result is always in question because Mysterio never has the true upper hand, but he always wins.
Not only could he be a credible champion (because no one can argue that he's not good enough), but he could be one of the most entertaining champions of all time.
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