A scale proportioned Hudson, or even a redo of the AC Gilbert tooling with can motor and modern electronics, would cost too much at retail for a first LCCA set. Definitely can't see a newly tooled Hudson as the first "S" thing out of the door for the LCCA. Perfect for the broader S market, though. In a larger sense, the Hudson as a locomotive choice for Lionel, should be almost self-evident
That said, Lou's comment that, "the Hudson is dead", by the Lionel people strikes me as very odd. It wouldn't take much research for the Lionel marketing and executive folks to understand that there is a solid market for an AF S Gauge or S Scale NYC style Hudson. Two staples of any line of trains larger than HO would be Santa Fe F-3s and NYC Hudsons. Besides, the chassis for a 4-6-4 could be used for a variety of steamers.
I do not believe that the experience with the proposed Hudson redo of 1988 should be used as a marker for any decision on making a Hudson locomotive now.