As a 6/8 he would be fine. He can hold his part defensively and is a good build up player but I would not trust him alone back there. With a partner that would share this with him in a double 6 or 6/8 role I think he would be fine.
But - for me he really is the ideal no. 8. I love him a lot better with 4 in front of him than with 3 - but here you might have to see the players Bayern have or that they focus the play more onto the wings. In a 4-1-4-1 with a partner on the 8 who is partly more offensive or in a 4-3-3 either as a 6/8 pairing with a 10 in front or as an 8 in sandwich between a more defensive 6 and a more offensive 8.
Not in the top matches in which I would want to have a sweeper 6 behind - but in the normal matches I e.g. could see Gündogan and him as 6/8 partners. In difference to e.g. Kroos Thiago has a sense for the defense.
I do not see him as a no. 10 - I think he is wasted there. There is a reason why the modern no. 10 is not a thing in the top teams. They usually want the ball and are most valuable with the ball - but they are too easy to single out and to cover when played in a ball possession team. Ancelotti used him in that way in the top matches last season and he was not good in that - in my eyes he needs to work behind the "scene". If a player looks like a world beater or bad often depends on the conditions you give him or if he can play out his strengths and show less of his weaknesses.
Bayern has a midfield problem right now - with 9 players fighting for 3 spots. And it is not some young ones or players that would be satisfied being benched. It is a problem that came with the pasta cook (Ancelotti) who had the Xmas tree formation as his favourite and saw James and Müller in the front 3 and Martinez as defender. And liked b2b-players. Just that no team in the league wants to have the ball from Bayern - and when you see that 3 players from our U19 dominated a midfield with Can, Marchisio and Pjanic with 70% ball possession Wednesday night you can imagine that it will not be differently in the CL for the established ones. Vidal will probably leave. I still would not understand if they would Thiago leave because he and James are the only ones that offer the passing and creativity.