Could work but if I were in Hollywood and knew of the previous movie and how it bombed and helped kill the toyline for awhile, I'd probably give it a pass.
Go watch the toys that made us episode about masters of The universe and see the reactions when the movie was brought up.
Marvel and DC have both had embarrassing misfires that didn't keep them from trying again with better results. Most people thought Stallone's Dredd was terrible but that didn't stop Urban from signing on to the reboot.
If you have a good story, and if you trust the source material and don't ditch it like the Cannon film did (which was probably for budgetary reasons) then you can possibly make a good He-Man movie and sign some decent stars. If I were them, I would insist on a solid script before signing.