Another AU, but this time rewriting the episode so that it's less mean-spirited but keeps the same formula.
The biggest change would be keeping the Foal Free Press within the schoolyard. It's a small school newspaper, so branching out to cover all of Ponyville and surrounding areas wouldn't make too much sense.
The CMC would still masquerade as Gabby Gums but rather than writing about the townsfolk, they write about the schoolyard foals. It starts out harmless enough with Snips and Snails getting stuck together with gum, but eventually Diamond Tiara demands juicier gossip, and (possibly with the encouragement that they'd get their cutie marks) the crusaders decide to dig deeper for just that. They initially succeed and the foal free press soars in popularity in the schoolyard, but eventually the crusaders find that the embarrassing stories have led to the schoolyard foals acting more hostile towards eachother. Some accuse others of exposing their embarrassing secrets to Gabby Gums, and some are being teased for embarrassing articles they were written in. After seeing all the discourse and harm they've caused, the crusaders decide to quit the paper. At first Diamond Tiara tries to stop them by buttering them up with talk about how their gossip column is a huge hit, that this is their calling and that they're sure to get their cutie marks if they keep at it. They don't fall for it and say that it's not worth the pain they've caused their friends. Diamond Tiara then blackmails them with embarrassing photos of them like in the original episode, and they have no choice but to keep at it. As they try to get stories however, they find that nopony is willing to talk, as they figured out that the Crusaders were the ones writing the embarrassing gossip about them. As a result, they spent the rest of the day being avoided and shunned by the schoolyard. The rest would play out like the original episode did. The Crusaders writing their apology and submitting late enough so that Diamond Tiara doesn't get the chance to check it. It's printed, and the foals, while still upset about Gabby Gums' gossip, were happy that it was finally over. In the end, Cheerilee (having been kept in the dark until it was over thanks to Diamond Tiara) would have a small assembly to talk to her students about the recent events. She would say that while what the newspaper staff did with Gabby Gums was wrong, the rest were still partly to blame for the incident as they were the ones who wanted the gossip despite it being wrong. The Foal Free Press would be shut down for a while, and Cheerilee would barr Diamond Tiara and the CMC from participating in anymore extracurricular activities for the remainder of the school year as punishment for their actions. Cheerilee would also give Diamond Tiara a 1 week out of school suspension for her blackmailing the newspaper workers and keeping Gabby Gums hidden from her.
What do you guys think?

7917188

eventually the crusaders find that the embarrassing stories have led to the schoolyard foals acting more hostile towards eachother. Some accuse others of exposing their embarrassing secrets to Gabby Gums, and some are being teased for embarrassing articles they were written in.

So basically it'd be like the climax in Mean Girls with the Burn Book.

Personally, I always felt that the ending to this episode should've been the Crusaders digging up some dirt on Diamond Tiara and the bully getting a taste of her own medicine, leading her to discontinue the column.

7917196
Huh, I'm surprised no one ever thought of that

7917198
Because that's just revenge and it's not a good message

7917196 That was going to be the original ending. And I'm glad they scrapped it. All that would've meant is that the CMC got out of trouble by shifting their blackmail to an acceptable target, rather than having to fess up to anything they did wrong.

7917366 Except they didn't do anything wrong. They knew that what they were doing wasn't right, hence why they were feeling bad about what they were doing and wanted to quit, And then they get outed as Gabby Gums and punished for it. This is exactly why I hated "Hearts and Hooves Day", because the Crusaders are punished for not doing anything wrong despite already having learned their lesson.

7917375 They were punished because only we the audience knew about the blackmail. From the perspective of the adults, it looked as if the CMC were still trying to find gossip even after they'd been exposed. And in "Hearts and Hooves Day", regardless of their intentions, they were meddling in the private lives of two other ponies.

7917400 And I don't think that was wrong of them in "Hearts and Hooves Day." To me, they seemed to be getting punished for no good reason. What happened was an honest mistake.

Ponyville Confidential: the most contentious episode in the entire My Little Pony brand.