That is what I was thinking. While a previous poster was technically correct that Japanese Green was not equivalent to our Blue, neither was the Japanese Blue. If you ever play the Japanese Green, you'll see why they used Blue's engine... it's practically the same game with a few bugs fixed and better graphics. I think there are a couple of dungeons with different layouts, but that's all. They didn't deny us an edition of the game so much as they denied us a beta version of the game that was even bugger than the one we know. That's all just IMHO, but I don't think we missed out on anything worthwhile.
I really don't know if a VC release diminishes the case for a remake, though. They remade Ocarina of Time for the 3DS even though that had a VC release already. I don't think there's as much value in a VC release as a remake, because a VC game is basically just a ROM running in an official emulator. On top of that, I still have Pokémon Yellow and have no need to buy it because that game still works. I might buy a remake, though, simply to experience the new features.
Well, as far as Kanto itself, I think a game that goes further into the past might be interesting. Suppose you play during a time when Prof. Oak was younger, the Pokédex hadn't been invented yet so you have to write down entries manually in a Journal, Flint was still the Pewter City Gym leader, etc. Maybe you would even have to have physical Poké Ball storage in various Pokémon Centers because PC storage hasn't been invented yet, and you would have to go to the Center where you deposited the Pokémon to get it back.
A new game in the Kanto region might be interesting... probably better than a remake.