If the British are to purposefully build a second line fighter I would suggest a decision to build an export monoplane fighter. Then the British government might block the sale of merlin engined planes in the mid 30s.But why not just build more Hurricanes and use the merlins from Battles etc for them? Then put the second rate engines in a twin engine light bombers to replace the Battle?
A Kestrel design could then emerge and have a production line. In the late 30s anything with a production line wasn't going to be closed in Britain.