NSL1 could stay as it is now, a family area, whilst above it NSL2 could become the designated singing section. There should be no accoustics issues on the second tier. Then, only those in NSL2 would have to move if they don't want to be in an atmosphere orientated safe standing section.
I think that at the start, they should designate the 2 central blocks in an expanded NSL2 as the official singing section. At least then not everyone on the existing NSL2 would need to be relocated, hopefully not causing too much upset.
These blocks could be used by the club and 1894 for displays and other things. Ideally they would be able to use the front rows and the overhang as it would look the better, although this depends on whether or not the club go ahead with the hospitality plans.
People who want to be in the singing section and closer to the pitch could stand in the front rows (what is currently L2) for a price similar to the currently SSL1. It wouldn't be as close to the pitch as L1 is, but hopefully for most the new facilities and chance to be apart of a designated area with better traveling sound would be worth the trade off. Again, all this would depend on the club's plan for hospitality.
Further back in the blocks could be priced more like SSL3, to attract singers from there (and other areas) to the singing section for a price not more expensive than what they are currently paying. If this is going to work, it needs to be affordable for many.
If the whole tier was safe standing too, this would also help with chants starting in the official singing section before spreading around the stand and therefore the stadium.
If there was enough demand, they could extend the section by using more blocks in the North stand.