Though I am not a massive fan of either prequels, I would suggest they let Scott finish his trilogy at least so the whole thing isn't rendered a pointless mess. I think the promise of the Engineer's return and a direct lead in to Alien will be a good draw to put bums on seats. He just has to stop trying to make the film clever and meaningful and actually try and craft up some tension and horror.
Once they get that out of the way, maybe they'll re-boot again with an entirely new set of characters.
Timing wise, it could be set after the events of Alien 3, and have the company send a team back to LV426. Just because Hadley's Hope got blown to smithereens, it doesn't necessarily mean that the original derelict - and its entire cargo of eggs - was destroyed too. I always got the sense that the derelict and Hadley's Hope were quite some distance apart. And we know there were way more eggs than colonists, so there ought to be a few spares knocking about the place. Hard to believe the company doesn't have a record somewhere of Burke's order to Newt's parents.