Fork can work, and has worked before.
Look at what Ethereum and ETC did in 2016.
Ethereum is a fork from original Ethereum Classic.
If the community view the forked chain as the primary chain, this chain will carry the most value forward.
The current $LUNA and $UST can be $LUNA-Classic and $UST-Classic.
New $LUNA2 and $UST2 can be forked, but will need better economics. E.g. new $UST2 cannot be issued with same 1:1 ratio, but instead will need to be issued at a discount.
The ecosystem won’t work with $18B outstanding $UST.