Well first and foremost, I think all of us witch-hunters, grave-knocker-overs, and map-kickers agree there should absolutely under NO circumstances should be a sequel to this movie.
But we all know its going to happen.
So to make the sequel as painless as possible and to lose minimal dignity out of the original, there is one main guideline that they should follow.
THEY MUST NOT EVER EVER EVER EVEN CONSIDER FILMING THE ENTIRE MOVIE THE SAME "CAMCORDING" WAY!
Just think about how contrived that would look (Not to mention how fake). No. If a sequel must be made, it must be filmed like a normal movie. The sequel should be about the search party that looked for them. Setting: about 2 days after the film students be discovered MISSING. They go into the woods and find the film. They should watch portions of the film, a controversy erupts because some in the town think the tape is a fake, some think its real). There is sightings of the Blair Witch all over town. Search Party's go into the woods and come out with nothing. But Heather's Mom starts to hear the voice of the Blair Witch (just like the legend of the man that killed the seven kids). At first she blocks the voices out until the witch promises her that she will tell her where her daughter is if only she abides by her wishes. As you remember from the original, the seven children the Blair Witch killed were eventually found, dug up, and buried in sacred ground. All the Blair Witch requests from Heathers mom, is that those seven small graves be refilled.
After Heather's mom disappears as well....and various children turn up missing, the police started to get edgy again. With all the hoopla with the missing children AND the superstitions about the witch, the police are FORCED to reopen the search. And with the ever raising suspicion about the competency of the police to do their job and the legitemacy of the film that was found, they are forced to bring a guy with a camcorder to record the search.
I haven't planned out exactly what should happen at the end yet, but the last 15 minutes or so should be the guys camcorder tape (in memory of the first movie), but it should bring some kind of CLOSURE. It can't end as arbitrarily as the first. Everything doesn't have to be explained, but the movie MUST be left with the audience feeling that they've made some progression in figuring out what happened to Heather, Mike, and Josh. And THAT is the only way that the sequel won't end up being a trip to the dentist that didn't receive his Novocaine shippment.