If they were going to add an avatar, it'd be a separate new character, not Soren or anyone else converted into an avatar. I don't think it'd change the story much either. You'd get some extra chapters focused on the avatar, but the story of any later games, especially the Tellius ones, is already too big to be changed for the avatar like that. The avatar would probably get some generic lines alongside other members and many extra base events and supports, but I don't think we'd see the main story suddenly spinning around him.
Regarding the 2nd gen, it's kind of funny. A child system seemed like an impossible idea for remakes even after Awakening, but with how Fates handled things, now it seems like they could easily add children to any past games.