The BBC need to involve the record companies and do a joint effort. The artists need a professional context to thrive in, where there is a past and a future in the music business. They need professional backing in the studio, with song production and staging. I think it's pretty hopelessly futile and amateurish BBC doing an in-house yearly event, possibly (at best) hiring some competence and hope they'll get a lucky shot at a good placing or even a win. That is probably the only option for San Marino, but certainly not for the UK.
Despite common belief, I think the record companies would jump at the opportunity. It is business after all and long lines of songwriters and artists would sacrifice their hands for a chance. Not safe established artists but the semi-established and emergent ones.
Yes - the UK could win next year
No - BBC would probably not want to let go of esc monopoly and continue to associate it with ABBA