Cheriton,
I think you have hit on a great idea!
I was actually the youngest player in the very first game of "The Sun Never Sets" -- which took place in the game-room in the back of The Complete Strategist on 33rd Street in Manhattan, back around 1979 or 1980 (just after the very first edition of TSATF was published by Yaquinto).
As you suggest, the biggest requirement to make what you suggest work is researching and writing all the EVENT CARDS which serve to drive players into taking action every turn. Every card references at least one somewhat momentous event that took place between approximately 1860 and 1900 -- everything from labor strikes in the UK, which required troops to be sent to break the strike, to the outbreak of the Russo-Turkish War of 1870, which required sending large sums of cash from the British treasury to the Ottoman government, to the opening of the Suez Canal, etc., etc., etc.
To make the new version you would need to compile a new set of CARDS detailing similar events from about 1820 to the outbreak of The Mutiny.
The other issue is how extensive you want the game to be. I think the best thing about your idea is that you could play the campaign with fewer players. In fact, if I remember correctly, Pitt's "India Act" created a "Board of Commissioners" to oversee Indian affairs for the British Government.
I Just checked on Wikipedia and turns out my memory of the size of the Board was right: only 6 members all told. A Secretary of State -- who could take the place of the Prime Minister in "The Sun Never Sets", a Chancellor of the Exchequer -- who could do the exact same job he does in the present game by controlling the treasury (if I remember correctly!) -- and 4 "Privy Councillors" -- who can be the ministers of parliament. Only there's less of them required, because you can just play INDIA and Afghanistan and, if you want to be really ambitious, maybe add on CHINA too (Maybe Persia as well, since the Company fought a war there just before the Mutiny).
Myself, I would stick to India and Afghanistan alone, which would simplify the MAP. You could split India and up into 5 different "Native Areas", make Afghanistan the 6th and -- using the most original and still brilliant (IMHO) concept from the original game -- have each member of the "Board of Commissioners" control the Royal and Company forces in one area and the Native forces in another (for instance, I might control the Sikhs in the Punjab and the HEIC in Bombay).
I may be wrong but I remember a lot more than 6 players in that first campaign game! We had 2 players for every native area all through North and South Africa, India and East Asia (Afghans, Egyptians, Mahdists, Zulus, Boers, Chinese, Burmese – and later versions of the rules added more theaters) -- and every local native ruler was also the co-commander of Imperial forces in a different theater of operations, as well as a voting member of the British Parliament. It was great having so many players mix it up, but these days, in my case at least, 6 players would be a more realistic number for a big ongoing campaign. I really like the idea of limiting the scope to India while preserving the dynamic of each player having to balance his victory needs as a local native ruler in one theater of operations with his victory needs as a British commander somewhere else, all the time being careful make sure his actions in both roles don't bankrupt The Company, 'cause if that happens everyone playing loses -- the same way they do in the original game where bankrupting the treasury means the government has fallen and everyone is out of a job!
To get back to your original question: no, I haven't done it, but now that you're broached the subject I think I want to