I think the AD&D Campaign Set and several of the FR series splatbooks are pretty great (Savage Frontier, Bloodstone Lands, Dreams of the Red Wizards).
The problem is that to reboot the setting in a way that captures the qualities of the original, we would first have to reboot AD&D. Having only the original 7 character races and the orignal 10 character classes and the limitations of magic seems crucial to creating the feel of the setting. It also needs an oldschool exploration system in which nonmagical resources matter and a combat system and monster stats simple enough to handle random encounters on the fly. I don't see WotC being in a position where they could produce such a game, unless they would make it a completely separate brand from their D&D.
Releasing it as a campaign setting for Old-School Essentials Advanced Rules could work.
I would limit the published setting to the northern half of Faerun. Western Heartlands, Cormyr, Sembia, Aglarond, Thay, and everything north of that. The Southern half was pretty much not covered at all in the 1st edition sources. These are places where foreign merchants come from and the occasional mysterious wizard. But they are places that are only occasionally heard of, but not seen.
Obviously this setting would exist in an alternate continuity in which the Time of Troubles never happens. Otherwise there would be no point to the entire exercise.
Where the greateat potential lies is in making the setting actually look and feel based on 13th and 14th century Europe, as is stated in the introduction to the campaign set. None of the Rennaisance style of 2nd edition and the Dungeon Punk that followed. 100 Years War armor styles, woodblock printing, Hanseatic League style merchant guilds, and things like that.
Also, keep and reinforce the notion that "civilization is something of a novelty" in the northern half of Faerun. Cormyr is the exception as a unified kingdom under a single king. Impiltur, Damara, and Aglarond are more confedrations pledging allegiance to a king than centralized states.
And keep the human focus. The elves are pretty much gone. Other than Evereska, there are no elven settlements in Faerun at all. Only a few individuals or small bands who still roam around on their own. Dwarven civilzation has been shattered. King Harbrom of Adbar is the last true dwarven king deserving that title. There are some old dwarven strongholds in the Spine of the World and the Earthspur Mountains that still have some dwarves living in them, but most dwarves that other people will ever encounter are minorities in human cities.
Orcs, goblins, and giants are rare, with orcs playing a prominent role only in the Spine of the World and the lands immediate to its south. And of course a whole can of worms on their own. To recapture the original setting they need to regularly clash violently with human settlements, but they also should be more than an entire race of green-skinned marauders.
In the end, just return back to the original material from the first 2 years before the renfairigpfication of AD&D, and take its statements about the world as fact and follow through with them.
