Mercury is a good idea, he's one of the few performers who was so out-there visually that it wouldn't be too awkward/disrespectful.
Since this technology has been around for years now, it would've made sense for U2 to utilize it in a live setting. It would likely need an indoor setting due to environmental factors like natural light and weather conditions, but it would make for a crazy spectacle if used correctly. I hope they don't waste too much time recreating earlier appearances of themselves, maybe one or two songs, like Boy-era Bono or Macphisto who could be utilized in an artful way, but overdoing such a nostalgia trip would get rightfully slagged off by critics and myself. :-) Use it to create incredible visuals and impossible environments for the band to play in, not self aggrandizing. I've previously posted links to a similar projection aided 2008 fashion show (more than once to be honest) but here it is again. http://www.youtube.com/watch?v=oIIP7EMgvuk