Yeah you'd definitely be starting that area from scratch, which I think would be the way to go anyway if you wanted to re-theme the area and open it up a bit more.
As for Dreamworld, they're the two biggest plots of land left so both work for sure. There's also basing it in the former space of Blue Lagoon, although personally i'd love to see something like a custom RMC woodie start from there and use the land parcel north to essentially leave the park and go on a journey much like Rivals does.
I also reckon the island is better served with a few open family rides (Mack splash barrels, Vekoma floating island, some new animal enclosures like otters etc.) so my vote is for the Log Ride space. Then again I feel like Log Ride should just be refurbished, thematically plussed and put back into service....
I've done a crude Photoshop to show how little land this takes up (and yep, I matched the scales to check, it's surprisingly small).