The General Rules allow placing the studio in Sunset Valley via Edit Town. Can this not be done without knocking down existing buildings, etc?
Of course it can. You may have to add lots but there are several ways to accomplish it. The main thing is get a lot, at least 40x40 and on flat land, (or close enough to it that you can smooth edges) and make that lot a community lot. You can even do this with an existing lot. Click on the lot, and select build/buy on this lot. It will bring up a little house looking icon as part of the choices you have in build mode, along with trees, pools, etc. In that icon there are several, smaller versions of the buildings you need. Althernatively, Pinochle Point is your friend! I did manage to put all the LN entertainment type buildings there.
So, I take it we are going to need to have these buildings for this challenge? Lounges and such are not rabbit holes. Or is it just for the Sims entertainment? I hope not. If it wasn't for the elevator, and ONLY the elevator, I would remove LN entirely. I am so sick of having nasty looking vampires wherever my sims go. I guess you'd need them for mixologist, huh?