I can't believe this hasn't been proposed yet (to be fair, I just got the idea but it makes too much sense), if Universal is keen on not putting a ride in here for HHN space, I have a solution that not only keeps the Villain-Con theming but expands upon it, and turns this from what is, IMO, an abysmal attraction into a fun space for kids, a way to escape the heat for adults, and allows HHN to still utilize the space (and perhaps even more of it!):
Gut out the current attraction, turn the whole space into an Innoventions-style playground with games and continuous virtual shows at booths! This would allow the Villain-Con theme to be utilized properly with multiple villains having exhibits and not just the Sinister Vicious Six, but you could shut down a portion of it to be used for HHN houses, and still have the areas not utilized open during the day.
And just like that, you've gone from worst attraction in the park to a virtual playground that can act as a better holdover until a proper attraction takes the space.