I was thinking if there's a market for this:
Would they consider releasing all the missing episodes simply with a mix of nicely crafted cartoon images intertwined with surviving telecast photos (combined of course with the all the audios which are in perfect condition)?

They could be released in DVD cases with the same type of visuals on the DVD covers but with a special blurb on the cover stating its an "audio visual snap cast" or something of the like (so people aren't fooled to believe they are actually the original telecasts). This would make them attractive for us "completests" to purchase.

As they are not the videos, or even motion cartoons, they could be a cartoon picture (or photo if available) of a key image, from every minute or 2 of the story, with more images if it is for an action scene. As it is not a cartoon as such this would dramatically keep the costs down. By doing this and providing minimal or no extras they could be released at less than half the price of the DVD's, helping them breakeven.

Would I purchase them? -yes definitely. Would others? -dunno, but they could trial it for a story such as the Highlanders -with all episodes missing. If this proves successful then try others as well.

Where they can afford to fully animate missing episodes ala The Reign of Terror or the invasion then sure, they should do that. Anything less than that I can't see being commercially appealing, unless they did them all as one box set. And i'm not sure they'd sell enough of that to cover the cost of producing it. But as individual releases or even box sets of 2 or 3 serials: no way. I think the only people who will want to digest Doctor Who in such a form are very hardcore fans who likely will have already seen reconstructions online, and frankly the amateur reconstructions nowadays are very good; probably as good as anything short of full animation that the BBC might commission.

Indeed. The limited demand for stories which have already had an audio release and partial DVD release might make them economically nonviable. Particularly when you factor in the royalties due to those who worked on the show (or, in most cases, their estates).

Dont have to look too hard. Ian Levine has done some and Who Recons has tackled all the Hartnells. They are easy to dig oit on youtube and the latter on daily motion as well.

It doesn't seem at this time that the BBC are interested in Levine's recons.

The problem is that Ian just goes ahead and produces stuff without permission and then hopes the BBC will release it.

This video shows some of Ian's projects. From the okay-ish Mission to the Unknown animation and pretty good Shada part-animation (with many of the surviving cast, except Tom Baker) to the frankly awful versions of incomplete scripts/outlines and bizarre attempts to pad-out short segments into full stories.

https://www.youtube.com/watch?v=-4650h76xLk

Ian talks about "the BBC copyright situation" as if it's some sort of temporary glitch. In reality, the "situation" holding him back is the very existence of copyright. That's not likely to change anytime soon.

I had the misfortune to see some of the Levine stuff.

Shady and MTTU are fine, but the rest are utterly dreadful. He even had a go at making stories out of computer games.