An Osprey could pull double duty as an onboard COD.
Yes, and a Porsche Cayenne is probably also very good at pulling a caravan.
Doesn't mean you wouldn't be an utter idiot to use it for that.

Does the UK even have a requirement for a COD aircraft?
Any other power with a CATOBAR carrier is better and much cheaper off with a C-2 Greyhound or even an ancient C-1 (like the Brazilian Navy recently did). Unless you're the USN and want to throw copious amounts of money at it.
But a Osprey AEW&C does seem to be a good idea compared to the Merlin ASaC5. It wouldn't be as useful as an E-2C or E-2D, but AFAIK, those are CATOBAR only.
From the performance side it seems a good idea at first.
The V-22 does have better performance in many area's which would make it a better AEW aircraft then the Merlin. However, the difference is probably not big enough to warrant the cost, considering that the V-22 doesn't have a pressure cabin, limiting it to the same altitude a Merlin would operate.
From the cost side it's a very bad idea.
The V-22's better performance is probably not worth the additional (substantial) cost to procure them as the UK and definitely not worth the additional cost to operate another type of aircraft. That's after all one of the reasons why the Harrier was ditched.
Secondly - from a financial / short term side - why would you buy V-22's at 70 mln USD a piece (solely procurement cost) when you have spare Merlin's lying around?
Even with the spare Merlin's, the UK isn't make much haste with the replacement of the Sea King AEW, even though those will be out of service in a few years. Possibly there's yet another capability holiday coming there...