Not sure how feasible it would have been to preserve it in situ (probably not impossible though) and that would have been my preference too. Failing that I’d opt for sensitively (and with due ceremony) removing it and re-siting it as close as possible to its place of origin (as was done with Abu Simbel in 1968).
The Henge wouldn’t necessarily have needed to be indoors either; as long as it was protected from the worst of the elements it could have been set outdoors, against a background of sea and sky. It does not belong in a museum that’s for sure, and it’s not too late to campaign for it being one day relocated to a more appropriate outdoor setting.
We really have to change our approach to ‘displaying’ archaeological features like Seahenge. The on-going plans for Stonehenge centre largely around doing away with the existing ‘facilities’ and returning the area to something as it originally was. At the same time we have Lynn Museum doing quite the opposite. Dunno how others feel but I find this depressing (even distressing) and totally at odds with the integrity of the structure; it belongs to a Victorian mind-set that yanks things out of their context and puts them in glass cases and metal cages. That’s not to say things should not be saved, and somehow be accessible, it’s just how it’s done. A BBC news item of 8 July 1999, reports that, “After the timbers have been cleaned, examined and studied, it is hoped that Seahenge will be returned to a spot near its original site and go on public display.” so the idea of returning the structure to a spot near its original site was under consideration.
I doubt if it was long-term conservation problems that stopped the plan from going ahead (more likely to be cost) and there really is no reason at all that Seahenge cannot one day be set in a sympathetic setting (just keep English Heritage and Australian architects out of the equation though ;-)