The new, simpler media dialog for TinYMCE would be a new plugin to avoid conflicts with the existing one (which would not be used any more).
1) Make a copy of the plugin 'media' and call it 'moodlemedia'
2) Remove all the patches from the old one and restore it to standard TinyMCE condition in CVS
3) Hide the 'media' plugin from the standard toolbars and show 'moodlemedia' instead.
4) Strip the interface down to
a) A button called "Find or upload a sound, video or applet"
b) A preview window that shows the media
c) An explanation at the bottom that says "Your media will be inserted into your HTML text as a link. The Moodle Media filter will convert this into embedded media when the text is displayed."
5) The filepicker should be told that EXTERNALURL or LOCALURL are required.
6) The returned URL should be stored invisibly since we don't need to see it.
7) The submit button will turn the URL into a named link in the HTML.