I'm not saying that "Ripley's Nightmare" is a good solution, but it is a workable one if you want to retcon the series (a la Superman). I can't really think of another way to work it if I'm honest.
And you have Newt who will now be grown up... the perfect person to take on to other movies if needs be. The first comic book really handled Hicks and Newt well (him being a pariah, her being mentally damaged).
I just think that the both AL III EN and A:R were so badly received outside of this forum-world where we are all hard-core fans of the franchises. Let's imagine that it did happen - can't you just see Blomkamp on the special features saying just that (assume an SA accent)
"Ja, we saw it as a real chance to back and redress what have come to be seen as the sins of the past. Look. Alien3 and Alien Resurrection are great movies and our film takes nothing away from them - but the real fans of the franchise were disappointed. I consider myself a real fan - Aliens was one of the reasons that I wanted to make movies. So I wanted to take things back to where I... and I think the majority of people ... think they should have been. We have a wider universe to explore -- Ripley - Ellen Ripley that is and not Ripley 8 -- Dwayne Hicks and Rebecca Jordin are part of that universe and I think their story needs to be told. So we're saying that the events of the previous two movies were the result of Hyperspace REM state - HyRem. Or, ja - it was all a dream. But I hope we're now going deliver the sequel to Aliens that the fans wanted back in the day."
What you say about leaving the Ripley family and Fox giving into pressure... Fox seem to have made it pretty clear that the new 'verse will have continuity with the Ripley family -I've not read the new novels (its my birthday on 21st Jan, though!) but Ripley (and Ash?) are in them, Amanda's in Isolation... that's a pretty clear mandate.
Giving into pressure - that can, has and always will be countered with "giving the fans what they want." Its exactly what they'll say when the reboot Resident Evil for instance. "Paul's movies were great, but the fans of the franchise always questioned why Alice - a character who didn't appear in the games, was the heroine of the movie. Sure, Paul wanted to make it accessible to non-gamers, but the first one was made back in the day when consoles weren't so prevalent. Now, that isn't the case, and fans of Resident Evil - I consider myself a fan... Playing Resident Evil was one of the reasons I wanted to make horror movies... deserve a story with the characters they've invested so much time with. With this movie, we're hoping to deliver exactly what the true fans want."
Shit, I should write this stuff for them *lol*