2) Move to single elimination
Some of the best international competitions, particularly soccer's World Cup, start with group play before jumping into single-elimination competition. There's nothing wrong with that model, but it fails to maximize the excitement that could come from the In-Season Tournament.
For that reason, the league should switch to a single-elimination format.
There are a variety of ways to accomplish this. The easiest might be a few years away - when the NBA inevitably expands to 32 teams, it will make the cleanest bracket possible. Games can be hosted at the highest seed or the entire tournament can happen in a two-week timeframe at a neutral site, a la the bubble.
There won't be 32 teams next season, though. The best way to do a single-elimination tournament without a clean bracket is to give first-round byes to two teams and let the others compete for the remaining 14 spots in the second round. There can also be a double-bye system implemented for select teams.
Does it mean the best team will win the tournament every year? No. But that's true of the NCAA Tournament in college basketball too, and yet March Madness gets us in a frenzy every season. Everyone and their next-door neighbor fills out a bracket, something that's fairly difficult to do when you first need to predict group winners and a couple of wild cars and THEN project it forward.
One possibility to make this more viable is to make the tournament its own standalone event in the middle of the season. Not to repeat the bubble, but all of the events can be played in one arena or one city, perhaps culminating in a game over All-Star Weekend (maybe even instead of the All-Star Game, but that's another can of worms).
Diehard NBA fans likely know how their team is doing in the group standings, but others would be hardpressed to feel the same desire to find out. In fact, they may not care until the quarterfinals, or even the semifinals. Why not up the stakes and make them care now?