This is how I would do it. The cast would be unknowns for the most part, but I like Yorick's idea of Hugo Weaving for the Visser. Also I would do Morgan Freeman for the physical manifestation of the Ellimist.
Story: It's basically#1 The Invasion and that's what we focus on. There will be a bit of #2 The Visitor, and some original scenes. Very similar to Yorick's plan without the exclusion of important plot points. The only change I would make in character is that Rachel is more close to Melissa than Cassie and that they are more casual friends but their relationship grows as the movie progresses.
Scene:
Jake's opening narration
Characters established at Mall (including Melissa, see below)
Construction Site, Elfangor gives them powers, Visser arrives and kills him
Tobias visits Jake, Tobias morphs cat, Jake morphs Homer
School Cafeteria (group argument)
Rachel talks to Melissa, Melissa acting strangely
Cassie's Barn, Cassie morphs horse, Policeman visits
Tobias morphs hawk (possibly off-screen)
Jake, Marco and Tobias at Jake's House, Tom tries to get them to join The Sharing
Rachel visits Melissa/ acquires her cat
Parallel Scenes: The guys check out the Sharing/ The girls spy on Melissa (Viewers realize that Melissa is not the Controller, her father is)
Tom talks to Jake/ Jake is determined to free him
Jake morphs lizard, spies on Chapman
Group discussion at Mall/ everyone formally agrees to fight the Yeerks except Marco who tells the group for the first time about his family situation
The Gardens
Cassie captured (offscreen)
The Yeerk Pool
Afterwards Marco tells Jake he will continue to fight until Tom is free
Tobias visits Jake, viewers realize he is trapped, Jake decides to fight until the Andalites arrive
END
Should be around two hours and I think the concept is interesting enough to attract new fans.