I think maybe that could work, the Character of Tennessee does seem a bit of a Rebel, i would be inclined to think he would Trust Daniels, but we could have Mother Confirm that David is Walter, this would especially work if David has transferred his MIND into Walter on Planet 4 or he uses a Spare Body of Walter on the Ship.
Daniels could be seen as unstable and David could get Tennessee to take Charge and have Daniels restricted to Medical Assessment/Quarantine for Stress and Related.
So we cant rule out such a idea.... then it would have to be at some point that Tennessee does Discover who David is, and then realizes that Daniels is Not Mentally Broken/Stressed.
"No! This would waste the talents of two key characters."
Certainly and this is the Problem with the Ending of Alien Covenant, with Daniels aware of who David is, then he would have to think about his own Agenda and HOW this effects it and this depends on the PLOT.
If he awakens the Crew/Colonist a few or ONE at a time, where is Agenda is to Experiment on them ONE-BY-ONE etc, then it would not matter if he KILLS or keeps them alive.
If HOWEVER..... David wishes to set down on a World and attempt to Construct/Build a Colony or Buildings then he would NEED some of the Colonist and this would raise the following.
*The Colonist would maybe be weary if Tennessee and Daniels are DEAD, and so David would have to make a Good Excuse/Reason for this.
*If Daniels is Killed, then regardless of what excuse David gives you could expect Tennessee to maybe be Weary and Suspicious of Walter.
*If Daniels is kept alive then its a case of HOW does David/Walter convince her she must have had a Bad Dream, would she come around to Believe she was Dreaming? If not then INDEED having her shown as Unstable and suffering from Delusions etc could work.
I think Certainly as FAR as the Movie goes you would be better off to carry on the Characters from before, and Killing them Off-Screen or even at the Start would not be ideal as basically we saw this with Alien Covenant where Dr Shaw was killed off screen and Engineers via Flash Back.
The idea i had after AC release for the Sequel (Alien Ascension) i had a few Variations, but half of the 4 variants i had it that David was seen as a Savior of the Mission were it was suggested Daniels was killed by Tennessee and reveal that Tennessee was part of the Group who tried to Sabotage the Mission (as covered in the AC Origins Book) But Daniels was kept alive in some Dark Place where she is Discovered at some point.
When i was talking about this "For David the best option would be to take them both out! " I was talking about from is POV, depending on what his Agenda is.
IF he is going to just Experiment on the Colonist then he has NO other need for them, he can just Awaken them as required and so it would NOT matter if Daniels is Killed or kept alive, more likely he would KEEP her Alive.
IF however he intends on setting up the Colony as Planned by the Colonist/Crew then potentially Daniels knowing who he is would be a Problem for him.
IN HINDSIGHT......
The part where Daniels asked about the Cabin on the Lake should have been left out, while it brings a sense of Despair/Horror for Daniels, you could have revealed the Truth to her in the NEXT Movie. The Audience would know (if not already) who David is after Daniels is Safely Tucked into Sleep Blissfully Unaware of the Horrors that could be in Store... We then get to the Ending HOW we did with David asking for Wagner to be Played and Regurgitating the Face Hugger Embryo's
This would have left the Plot for the Next Movie to not have to find a way to Tackle that Daniels is in the KNOW. What we would have had is a BETTER Platform for a Sequel as Daniels and Co set up the Colony, Build a Cabin on the Lake, Happy while she has some Memories of the Horrors before.
THIS would make it more of a IMPACT when she Discovers at a latter point that David is Walter via some Actions he may be up to/caught in the Act of...
But this is what happens when Writers DONT consider how any Revelations/Plots from the Movie could Limit/Effect the Potential for the Sequel.