Why does there have to be a choice? A MoM-style game is going to take at least a year or two to develop even with the exisitng engine- in the interim you could release 1 maybe even 2 expansions for FE.
If there MUST be a choice, I'd say go for the "Mom-style" game. You are absolutely correct that the Elemental name has been totally tarnished, and it's time to move into a new IP.
The things I'd most like to see different between the MoM game and Elemental are:
- No more "create your own troops" - this should be part of an editor, not the game itself. It's a huge distraction. That being said, being able to select "upgrades" or something like that would certainly be fees-able- just not as in-depth as the current system.
- Many races, and not broken down into ideologies. Each race should have unique aspects that only cities of that race can do.
-When you take over a city it needs to track what race is in the city. This was the MOST ANNOYING thing in Elemental - If my Trogs (to use elemental races for an example) take over your human city, the Humans shouldn't instantly become Trogs. If I want to make it a Trog city there should be unrest as I evict the current population. Look at how AoW did this for one possible method - look at Moo2 for another.
- Government types - AoW 3 is doing something like this although I'd like to see something much expanded. If you are a Feudal government you should get certain options - similarly if you choose to be a Republic you should have different things entirely. Governments should evolve and branch out in different directions for even more diversity.
- Non-Magical factions and rulers.
- Better use of the awesome terrain function of the engine. Different races should prefer different terrains.A desert-loving race should have penalties in snow terrain etc.
- Less emphasis on Hero's and more emphasis on troop types.
- Custom Races!!!!!!! This was taken away from Elemental, and was the thing I was most looking forward to.
- More Diversity.... More Diversity.... More diversity.....
- No more Shrines. This was an ill-conceived concept.
- More emphasis on resource collection and control. Look at Civ4 (not 5) for how to best do this.
- Bigger stacks. Less focus on individual untis - All troops should be the same size (makes it easier to "eye" the possible strength of a stack.
- No more sub-races. Humans are Humans. Period. The differences between them should be the chioces made by the player, not something taken from lore.
-Random Empire names
- Neutral races that can conquored to create unique units, improvements, etc.
Wow...there is so much I'd like to add here but if I do my post will be waaaay too long.