Exciting news...at least for myself. I really dug TRACY and even found the multi-soundtrack gimmick to work really well in the context of the world in the film. (Jesus, even Erasure has nifty cut that's heard for mere seconds in Tess' apartment!)
In my not so humble opinion, what he should do with this is set the film in the 50s. The color palette is toned down with more browns and greys. Tracy's aged and really ready to ride a desk. The Kid has grown into a hot shot cop more interested in chasing headlines than criminals. Tess and Tracy have seperated leading to an awkward triangle with Tracy Jr. Madonna's suitably haggard to play a washed up Mahoney, unfortunately the she died in the '90 film; but these movies ignore past details all the time. The bigger issue is that almost every single major and well-known villain was killed the first go round (Giving Hamlet a run for it's money in the "Ice The Entire Cast" dept). Tracy would have to be working something like Ness' torso case. Or have the antagonists be something like the early Corleone clan. Tracy could lament the passing of an age of gaudy clownish gangsters only interested in knocking over banks and meat shops. Or maybe a film studio could be pestering him to sell his story.
You could really go in a couple of good directions with this. I really hope he goes for this. I'd be the first to buy a 'ticket' shirt! 
And Beatty's metaphor is a bit clumsy but I buy this kind of frankness more than all the shabby backpatting that folks in Hollywood do by nature.
