It's always been the case that City fans have liked the banter with away fans. Wherever the away fans have been moved to on a permanent basis the more vocal fans tend to move to be near them (over a period of time).
If away fans are to be moved on a permanent basis then the more vocal home fans would also have to move as well to ensure atmosphere works.
When away fans were moved to the old North Stand at Maine Road, the rest of the North Stand became much more vocal than it had ever been before (since it was seated). It used to contain families and so on, but the makeup of those sitting there changed because fans liked the banter.
The same happened with the old wooden Platt Lane in the early 80s when away fans had a large support on the open corner. Fans gathered at the end of the Kippax nearest the away fans and in the PL seats nearest them.
We have lots of evidence of this and what's happened over the years.
Moving the away fans from our most vocal support (and giving the away fans an area where the sound can come booming down due to the stadium's design) is never likely to help the atmosphere unless the vocal home fans also move.
Personally, I'd extend the stadium and look at ways of creating something special then. Bring in acoustic experts and experts on human behaviour and get to grips with the nature of support, banter etc. This needs to be properly researched and investigated, but with the right level of detail it must be possible to create an area for support that allows the banter, the noise (from home fans) to grow, while keeping the away fans out of sight of the cameras.
Had we had City's more vocal fans on level 3 next to the Bayern fans the atmosphere would have been outstanding last night - that's why the old Kippax developed its reputation because they were on the side of the pitch next to away fans.