A point regarding "a new terminal to the south would have to be built in Herts" - it would not: lets not forget the wonderful example of Gatwick.
Was due to be built on its current site, when the site formed part of the county of Surrey. Surrey said that they could not provide fire cover and West Sussex said they could so the boundary was changed around the airfield and West Sussex now have the world's buisiest single-runway airport within their county.
Its been done before and it can be done again.
Jordan