First of all, if Sanders was offered the VP spot and he accepted it, it would mean he would actually try to make this work, otherwise he wouldn't take it and would prefer watch Hillary lose. So under the assumption that he accepts it, you just solved the whole mess of the past few months, which IS a real issue whether Hillarystans like it or not. So at least the party itself is secured, and chances are it comes out stronger than it went in before the elections started.
Second, your description of Sanders doesn't exist in the average Joe's mind. Most people are paying fuck-all attention to the campaign, don't know who Elizabeth Warren is, and the only reason they know who Paul Ryan is is because he ran as Romney's VP. So people would see Sanders as the other Democrat pick, who's more to the left than Clinton, big deal. Trump would attack him, but all that would do is give Sanders an opportunity to attack Trump back and this time with Clinton: THAT is deadly from Trump's campaign, regardless of how he tries to characterize Sanders. Yes Warren can attack Trump, but too many will simply dismiss her attacks, and see her as Hillary's attack dog, something Sanders would not be seen as at all.
You can pretend Sanders can lose and leave and that it won't bring Hillary's numbers down, it will, but there is no way she can't take that into account when it comes to who the VP pick will be, and Warren won't reverse that.
If there's anyone else than Biden or Sanders who can this, other than Obama himself, I never heard of them.