The majority of pre ROTJ novels will probably be OK, but most of the later stuff will be trashed. If they're clever they could 'pull a JJ' and wrap up the last novel with an almighty reset to the death of the Emperor and soft boot the whole thing whilst leaving the dumped continuity as another timeline/loop.
Doubt they will bother though.
Has the EU ever done time travel or alternate realities? Not "what ifs", but actual Trek "mirror, mirror" type alternates.
Never to my knowledge, but I eventually gave up on Star Wars lit during the Vong war and never went back.
I'd say it would be a first, and I'd assume it would be non-physical time travel, with a Jedi or Sith somehow sending their consciousness back in time to their younger self using The Force, and thus altering the timeline. The superseded EU would then become a closed loop but still exist...