I really think it's a great idea. It's the perfect opportunity to bring back a much loved character. Robert Duvall is still a great actor and it's obvious he was sorely missed in GF III. It would explain why Michael never expanded on his "His father died" comment. I never did get why he was so vague about Tom's death. Maybe it was just to keep people from asking too many questions. It would also prolong Michael's idea to keep Tom out of danger from the FBI or whomever. He would need him so that's why he was "out" Tom could always say that Michael knew that after his death the next Don would sorely need Tom's help in Michael's quest to become legit.
But I do have two problems with it. First of all, I doubt that if he went into hiding he would just leave his wife and children. Ater Don Vito teaching his boys the importance of family I don't believe Tom would just abandom them like that. And second of all....He is not nearly as hot as he used to be!