I mentioned my fantasy booking of Kane before, but I doubt re-treading it here will bring down the quality of this thread.
Kane needs a break first. Give him six months off and have him slim down a bit and grow his hair back out. Before he leaves, he could cut a promo on how he doesnt have the heart to keep up this facade anymore. He admits that he has always known he was not disfigured or burned, and that he has been shaving his hair this way for the past several years just to play a character. He doesn't have the desire for it anymore, and he's going home.
After a couple of months, a couple of wrestlers can debut. I would call them Minion and Lucipher, a tag team that cuts promos stating that they will unleash "Hell on Earth." They can say they do their master's bidding, and serve only him. Around 5 months after Kane has been gone, they say that their master is ready to come back. Rather than make cryptic promos about who their master is, they announce that it is indeed Kane. Each week, Kane's return is hyped up, and they say that it won't be the Kane that they remember, and everyone should prepare for his return.
The night has come for Kane's debut, and he is brought out to the top of the ramp on a throne carried by druids while (face wrestler) is in the ring. He has medium length hair, his goatee is back, and he is wearing a black version of the mask he had last. He is wearing a dark robe and no glove. He sits on his throne glaring at the audience and his followers as his new music plays. He cuts a promo saying that he is ready to return due to finally being able to be himself. He says that his life has been full of torment, and he lives in his own personal Hell. However, he rules that Hell with an iron fist, and he unleashes that Hell on the WWE starting tonight. By raising a hand, Minion and Lucipher rise from their kneeling positions beside his throne and make their way to the ring. They get in the ring and fight with (face wrestler), who puts up a decent fight. He turns around into a Kane uppercut, however. Kane brings him to his feet and levels him with (new finishing move). Kane's followers take (face wrestler) backstage with them.
The next week, that wrestler is re-christened as a follower of Kane (a la Undertaker's Ministry days). Kane cuts a promo and says that this may seem familiar, as his brother used to do something similar. He says that he and his brother have a lot of parallels in their wrestling careers. However, he has never won the big matches like his brother, and the one time that he lucked into the title in a First Blood match, he didn't possess it longer than 24 hours. However, his brand of Hell has him as the unquestioned ruler, and to rule in the wrestling world means you hold the championship. He will "convert" one of our beloved wrestlers one at a time until he is given his rightful shot at the title.
Kane terrorizes the roster over the next few weeks, chokeslamming wrestlers from the ring to the floor, "breaking" their arms, and injuring people right and left. Kane's "conversion" hasn't brought anyone over to his side with the exception of that first wrestler. It's been more about wreaking havoc and clearing the path for the battle with the champ. The champ says he will fight Kane for the belt if it means he will stop the destruction. They have the match and Kane wins convincingly after proving to be much faster and more mobile than he was before, yet still being able to overpower his foe. He dominates toward the end of the match and hits his finisher for the win and the title. He holds the belt for several months while having a dominate reign and destroying everyone in his path. Undertaker has not crossed his brother's path during this time, but finally comes out when Kane is about to have another wrestler set on fire. Undertaker says he is the man that can end Kane's rule over his own personal Hell. Kane says that this was what he wanted all along. He wanted to come back and be not only as good as his brother, but better than his brother ever had been. He wants their fate decided by one final encounter, where the loser is gone from wrestling forever: Hell in a Cell retirement match.
Personally, I would have Kane lose the match and be banished by Undertaker. At the next Wrestlemania, Taker finally loses and is getting beat down after the match just to cement even further the rub that the wrestler who ended his streak will get. Kane comes out for the save, he and Undertaker hug, and Taker announces that he is retiring from wrestling now that his streak has ended. Paul Bearer comes out with the urn, the lights go out, and when they come back, Kane and Taker are both gone.