It just might work: still the same universe, just a prequel where Batman is inexperienced and not that gritty (even naive in a sense, believing criminals while coward, can reform and become good people), Joker is not as crazy (or they could go with the Joker reinvents himself angle), Harley (no way they're skipping Harley) is just the Joker's girlfriend who wears a jester suit, Penguin is a fat guy working to get up the ranks of the mob, Catwoman is a cat burglar, Robin (Grayson) is a young acrobat kid, Barbara is still Batgirl...
Either way, gameplay may suffer from the lack of modern gadgets

And that right there is why it's ridiculous.
Silver Age?
Harley doesn't exist, Bane doesn't exist, Black Mask doesn't exist, Croc doesn't exist, Zsasz doesn't exist, Hush doesn't exist, Ra's Al Ghul and Talia don't exist..and so on.
I'm not against the principle, Hell an S.A Batman game could be all kinds of cool.
The Brave and the Bold game was aces and that had all the silliness and none of the clout of a "proper" game.
But..Bumbershoot Penguin, Clown Joker, Killer Moth crazy sci-fi stuff, Bat-Mite..
Given that a great deal of Arkham players don't give a hoot about Batman comics, how the Hell are they going to react to all that.
If it's true S.A, you can't have characters at the level of violence AA/AC had, you don't have the detective gadgets and so on.
How the Hell do they make a prequel that builds on Gangster Penguin, psycho Harley and so on, when all of that is the absolute antitheses of the S.A comics?
Plus, whilst I'm not against shaking things up, not only do you lose the narrative the Arkham games have carefully built, but you have guest stars..
Warner's have been looking at Lego Batman, haven't they?
I'm just afraid that this is a mandate forced on Rocksteady Games by Warner's (that press release says it all) and the finished product is going to suffer.
I'd much rather just see a JLA game and have done with it.