Could the registry be replaced? Sure, in software, pretty much any change is possible.
In practice though...If you were to replace the registry, you would end up with something that pretty much looks exactly like the registry.
Go take a look at all the programs on your hard disk that use the registry APIs in [consults wikipedia] in advapi32.dll. (There is a way to dump the APIs that a binary uses with link.exe; wish I could remember the command right now.)
Pretty much every executable file uses the registry, and expects keys to be in certain places in the registry. The APIs for getting/setting stuff in the registry are not going to go away for the next 10 years.
What about making a brand new son-of-registry, with new APIs, that new apps will use?
This will fix a bunch of problems (because you would be able to sidestep the mistakes you made while designing the current registry; add more metadata to keys to not roam, etc)
...but it would be decades before application developers will use it. (Because nobody is going to target their apps to Windows 7 only; they would wait before Windows 7 was the oldest OS out there before relying on that API. A lot of our external application developers only use APIs that have been in since Windows 2000. Sigh.)