There’s a problem with your suggestion, OP. The personal story and living world directly conflict, not just storywise but mechanics wise as well. The personal story requires the world to not change. The Living World makes it change. You’re right, they’re dancing around the elder dragons because of this issue, but I think I need to add another detail to your solution.
I was thinking back to World of Warcraft, specifically its phasing technology. Some might say, “But then you have to create two separate zones!” But that’s not what I mean. In Mists of Pandaria (and yes, this is a true story), I was next to a group of people at an Alliance camp in one of the zones in Pandaria. Thing is, we could see each other, but we saw totally different things due to the fact I had not completed the corresponding quest chain. To me, the camp was in flames. To him, it had been fixed.
This would allow the personal story to make changes. But then how will people still doing the personal story see Living World content in Orr that takes place post-Personal Story? Simple. Bring on the time travel NPC! The time travel NPC storywise could be some powerful wizard, and is simply a way to transition in and out of the two phases. Or maybe a time travel orb sitting on a pedestal? Use the orb, and switch between post-Personal Story Ending and pre-Personal Story ending.
Combine this with your changed personal story ending and the other suggestions you made, BINGO. Perfect solution, though very ambitious. One problem though, you’d have to change more than just the last two personal story steps. There are entire steps related to pushing towards Arah. So unless you change your ending to taking place in Arah you’d have to retcon a large chunk of the Orr campaign, which isn’t very feasible.
A side note: There are areas below the Zhaitan fight in Arah which appear to be there for what was supposed to be a ground fight. ArenaNet could use those areas and put in what you described, without retconning the Pact. What do I mean? Have Trahearne step down! It’s so simple! Why jump through hoops when you can have Trahearne step down from his position in the final chapter? (The Celebration), and have you become the highest rank in the Pact? His wyld hunt was to cleanse Orr, not kill dragons, y’know.
To clarify, i’m not saying keep the entire final chapter as a ‘celebration’. Let it end up having Trahearne feel ashamed for not being there, and allowing the Pact to be cut through like scissors by Zhaitan. In shame and humility, he relinquishes his title as the highest rank to the player character, and a deep sorrow is felt for those that are lost. In the final cutscene, you, the player character, who with the help of only a few party members slayed an elder dragon, give a speech to the remaining soldiers of the Pact promising to rebuild the Pact and take the fight to the other Elder Dragons. From that point on, you are once again the center of the story.
Also, as for how Zhaitan cuts down the Pact? When the megalaser takes Zhaitan down, have Zhaitan crash into the ship the player character is on. In the midst of this chaos, the ships in the background can be seen crashing to the ground in an explosive cutscene, destroyed by the dragon champions attacking them. (Yes, the dragons flying in the background during the Arah mission that you don’t fight.)
Finally, when you crash to the ground, all of the members of Destiny’s Edge and each party member will have been scattered across the ground. All of the Destiny’s Edge members will be unconscious, but the players manage to rise up off the ground. You, the player characters, are forced not only to defend the unconscious Destiny’s Edge members but to slay the elder dragon by yourselves.
Or the Destiny’s Edge members could fight alongside you in melee combat. Whatever works best, I guess.