I don't think having DC in one place over a few weeks would work. Why people come to watch DC is to cheer for their country. If you have an Argentina-Czech Rep. tie played in e.g. USA, you can say there aren't many Argentines or Czechs in the crowd, and the crowd isn't very big at all. Big crowd doesn't care if none of Big Four plays. In Argentina or Czech Rep. you'd have a full house.
Ryder Cup is played at one place over one weekend, and it works. That's because there are only two teams and it's always on either teams home soil. But DC World Group has 16 countries, and I dare to say big crowd in USA wouldn't care about e.g. Argentina-Czech Rep. DC final.
So, I'd only change some things in current format, or keep it as it is. Switch to best-of-three would make DC ties physically easier, and that'd suit also for TV channels. On the other hand, it would force DC to switch to Fed Cup schedule of only two days, think about saturday's program being only one doubles Bo3 match, even two singles Bo3 matches per day is little. And in FC, I don't like that doubles are the 5th rubber, I prefer DC schedule.
Besides, I don't think Bo5 is the biggest problem of DC. I think DC's big problems are travelling to whichever continent for one weekend and possibly having to adapt to a different surface than what you've just played on. Well, I wouldn't change the surface thing, I like it how teams select a surface that favours them, I'd allow also carpet. But anyway, I think it's reasonable to say that you may have to play one individual event less for a DC tie, Berdych is now an example on that. That's why I think it's right that they give ranking points from DC ties, those players may miss other tournaments because of DC. And I'd even go so far that I'd give prize money for rubber wins, that would be an incentive for less rich players. If you win two singles rubbers and the doubles rubber, I think that equals to at least a semi in a 250.