I was writing out a full response to each comment which I stupidly deleted, so I will add something of an abridged version.
First of all, I am a very Traditional Catholic, but I just thought this scenario and its possible implications interesting. One comment that keeps recurring is, "if the Church did this, then it would cease to be the Church". Well, I personally agree, but not all Catholics feel the same. If the Church had fully modernised in the mid-twentieth century (that is to say, if a Modernist became Pontiff and implemented that agenda), I personally think that most Catholics would have accepted it (as they accepted the Second Council).
The division between the theological and social issues is an artificial one. Latin, vestments, private confessions, married priests... these are issues of discipline which can be instituted or dispensed with at the whim of the Pope. A change to any of these would not being about a schism. Contraception, women priests, the Real Presence, divorce, open communion with the Protestant denominations... these are issues of dogma which could indeed break the Church in two (one only needs to examine the furor caused by the last Synod on the Family an communion for the divorced and remarried). Personally, I believe that any altering of these dogmas would be cause for declaring the Holy See in error, if not schism. However, at the crux of the argument here is whether Catholics in the 1960s would have agreed. I have no doubt that some would have if all these things were changed, and the Lefebvre's movement would have been far larger and more powerful (and perhaps joined by any number of other cardinals and bishops). But I don't think that the majority of Catholics would have openly disputed the changes if they came from the Vatican and were supported by the Pope and the bishops. Did the majority of Anglicans? Or Methodists? Or Lutherans? In my mind, a Catholic Church which modernised would be split in two (eventually formally) between a large, liberal, ageing (in the West) church based in the Vatican, and a smaller, traditional, more vital Church based in Econe or Madrid.
The reception which the Second Vatican Council received was largely positive among Baby Boomers. It was a genuinely inspiring moment for them, and has continued to be an inspiration today (not one I agree with, but when people in their seventies are still committed to a reform which began the 1960s, you know that it must have actually appealed). If the theologians change dogma, there will be a large number of people who whole-heartedly support them. I have read contemporary journal articles from the time, and support for a mass reform was immense. Perhaps this perspective is because I am Australian, a country whose hierarchy and laity were almost unmatched in their passion for the reform, but from what I have seen the reaction was fairly uniform across the Western world.