If they could have gotten the Magic brand at a reasonable price they absolutely should have done it. There's still heaps of people with goodwill from those days who all have kids of their own now.
I actually thought the Dragons were starting to do a really good job of bringing together the fans of all the defunct teams and the rivalry with the Tigers was great. Its a shame that all went down the way it did. With United then trying to take that space its hard to see how the Dragons brand could work now, except for the people who insist that United is still just the Tigers and who would probably get on anything (like the Phoenix).
As LV said above, they should have started a second brand (whether it was united, phoenix, dragons whatever) in addition to the Tigers (the one team that had survived everything) rather than butcher that and canibalise their own product.
"Not the Tigers" is actually enough to get a lot of people to games. Without the Tigers there as an enemy, its just two made up teams. Sure if they can both survive long enough there'll be some kind of rivalry eventually, but I'd bet it never lasts long enough