I get that this is a thought experiment more than anything else – but the big question for me – why on earth would WoTC release 4e as anything other than the next D&D incarnation?
Why would Coke make anything other than Coke? Why would Chrysler make cars other than Chyslers?
Because they're trying to capture market share with people who don't necessarily want Coke or Chrysler exclusive of all similar products...but who nonetheless trust those companies.
Because then the big, big question: what happens to D&D? WoTC certainly wasn’t going to go to Paizo and say – hey why don’t you run with this –we’re going a new direction! The other alternative would be for WoTC to release a Pathfinder like fix 3.75 if you will, but then they have 2 competing fantasy systems running at the same time – a massive recipe for disaster.
That is the conventional wisdom, yes. But conventional wisdom isn't necessarily true. There are companies that manage to produce products that cover similar ground but still cater to different audiences- see the aforementioned Coke and Chrysler. Even within the RPG biz, you see that this is possible. Look at the original WoD games: while mechanical underpinnings were similar, their line of Mage, Vampire, Werewolf, Changeling, etc., were not balanced to be played with each other. Not well, anyway. (Later editions changed this.)
As THE major player, the proverbial 800lb gorilla, WotC has the resources to pull this off...IF they properly differentiate the products, of course.
WotC early on did try to release another FRPG, Everway, alongside D&D. It failed, not because people didn't like it, but because WotC simply didn't have the cash flow to support Everway. They also tossed Primal Order. About the only thing they kept besides D&D were the cash-cow CCGs. Times have changed- WotC has much deeper pockets and cash flow than they did in the early days of 3Ed. It is entirely possible that they could have invested in and supported a non-D&D FRPG.
I think part of 4e’s problem was not so much how different the system was, but WoTCs somewhat bungling rollout and subsequent issues (Gleemax etc.) but as far as releasing it as a different system (even “by the makers of D&D) I think that would have been an even bigger disaster.
If 4Ed were released as another product from "the makers of D&D", the rollout goes much more smoothly, since they wouldn't have felt the need to dis the previous edition, there wouldn't have been the same baggage about license cancellations (which may not have occurred), etc.