Totally agree that the area should be brought back into action, especially as other parts of the park are running out of space.
Ideally, I would love to see Corkscrew, The Beastie and Thunder Looper rebuilt in that area.
What I'd do is build some high sound proof walls, which you usually get around airports, around the back of the park nearest Alton. They would be painted green in order to blend in with the trees. I would then extend the crazy Cloud Coo-coo Land theme out to Coaster Corner, by rebuilding The Beastie on the site of the Mini Apple. I'd then rebuild Corkscrew, complete with a quieter lift hill chain and new corkscrews, on the site of the Alton Mouse area. I'd then reopen the Flag Tower, bring back 1001 Nights and the Bouncing Bugs and then get a new flat ride. I would also rebuild a quieter Thunder Looper on the land between X-Sector and Coaster Corner.
Of course that's beyond my wildest dreams and I know it'll never happen sadly. However I really do like the idea of a medieval theme, but a really good one (i.e. NOT Merrie England) and linking it in with the Towers/Flag Tower, Hex and the Dark Forest. The children's rides could be moved Cbeebies Land and maybe the Bouncing Bugs brought back for that area too. Then the Cred Street are be repainted and extended, Twirling Toadstools rethemed again, a new coaster(s) (a woody perhaps) and flat rides built in Coaster Corner, CATCF becomes a dark water ride like Vahalla- which would be really good and then there is the extension of the Dark Forest complete with the 'Tree in Chains'. Then the Dark Forest of the 11th Earl of Shrewsbury would encompass all of the southern area of Alton Towers, including the Towers themselves.
That is a REALLY good idea and I can see that or similar happening. The alternative is they extend CCL and build a family friendly coaster or two, perhaps a relocated Spinball and/or a ride like Knightmare (Camelot rollercoaster). Eitherway, they need the Airport style Sound Proof Walls.