Financially at least that's the perfect model for me. You sell someone at peak price and reinvest into wider squad growth/strengthening for the mid-long term.
Obviously in practice it's more difficult to ensure success from a playing point of view. There are no guarantees with scouting and player development so some players won't develop in time for when they need to be relied upon or perhaps even ever get to the required standard. You have to spread your bets to some extent and hope you've done enough, if you get it right financially then you can hopefully build a bit of contingency to go and buy a short term fix in those situations.
You go back to when Jota was sold, he was probably at peak value and there were other options in the squad for his position, at times already taking his place, so he was a viable candidate to sell for funds. The reinvestment wasn't right though, if Fabio had been a third of his price and you could've then spent similar on a young centre half and central midfielder with a view to them coming into the first team in a year or two. Could've made the same case for Traore at that point in time but you can only sell what someone wants to buy.
Then you'd have pitched up last summer with maybe this young centre half maybe ready for more action, would maybe free Coady up for a big money sale after his England involvement. You spread those funds around again, maybe another young central midfield, a young wide player, with a view that this summer it might be Neves' turn to be the cash cow. Maybe you find another young forward too with eyes on Jimenez being next year's man out the door.
The squad size in recent years hasn't aligned with this practice though, you need to carry more players to allow for this succession planning. If you're going to gamble on these lesser lights you need to be able to nurture them and bring them along for when the incumbent has served their time. Wolves haven't had that conveyor belt so now they're getting to a point where a big chunk of the current team are getting stale or past their best and it's expensive to make like for like replacements, there isn't the time to wait for younger players to develop now.
Of your two proposals, selling MGW seems the better option at the moment, if you could get the sort of money being banded around. If it covered the signings of the three you cite then I'd see that as decent business. Player who doesn't really fit the current setup gone for big money, proven performer retained, desperately needed centre half option added, potential successor to Neves/Moutinho on board and a backup to Jimenez/Silva not working out.