The 1st wilderness explorer area in D&D, the location has changed with different WotC rule sets and other authors.

It is a perfect fit for DDO's evolution. The Kopru have minor Psionics abilities, so that fits into the direction the game is heading.
The island itself would be an easy trip from Stormreach Harbor, so I expect that portal to be there.

If done in the spirit it was 1st written, a fair amount of time would be invested into finding the items needed, the wall, NPCs to get to the boss.

As for the boss, SSG has it's own version that I'm sure would be a great encounter for a raid boss. This where PnP takes a different path than DDO. In DDO, we can "beat" most of our bosses, in PnP, good luck with that.

Settings; Greyhawk, Feywild, known material plane are the obvious choices. I would wager on Feywild though. The introduction of Psionics logically starts there., but it is not my preference.
IMHO Eberron is the best fit. Too many reasons for me to list, so I'll leave it that.

X series modules can most certainly make the case for an expansion, however based on my personal experience running them, a lot of changes would need to happen to make them DDOesque. Honestly, some of those modules are lackluster.

If 5e is the standard for sanctioned content, we should be OK, if not, then so much would not fit into introducing Psionics.

Expansion vs. Stand alone.
Based on current trends with marketing dept, a dinasour cosmetic, fast travel and fluff would be another expansion let down IMO. Just not enough w/ IoD to warrant an expansion.
Stand alone update with quests and related rewards would be better for the players.

The bad guys in Isle are enough to keep players on their toes, and add some customization to them and we have a winner.

A great setting, and once on the island and get to town and find out about the back story, a wild wildernesses adventure to get to the Temple will ensue. Wilderness questing can be fun if done right. SSG has the tools to make this a great addition.

Unlike any other content, I would hope the Devs will use Lamma-Land and take some serious player feedback when developing the logistics.