It is not that it's inherently a stupid idea -- as you pointed out, it's a science fiction trope with a history going back to Aldous Huxley. It's that this trope doesn't make any more sense of Gallifrey than any other interpretation. (Compare "TARDISes aren't built, they're grown", which is "Oh, of course!" to me.)

When you present something like the Cartmel Masterplan as the unification and culmination of canon, and in so doing have to rewrite two significant bits of canon -- Susan as the Doctor's granddaughter and the Doctor casting eyes at whosis in The Aztecs -- your axioms are out of control.