I agree that Punk vs Austin should not happen, but thats purely out of my concern for Austin's neck. And while the match itself wouldn't be very good, the fued itself, its basis, build and mic segments, would be incredible.
You say its wouldn't work because Punk and Austin both respect each other? Cena vs Rock is based on the same thing, both have stated that they respect what the other has done professionally. But the fued grew due to personal issues. Punk could be having some segment with Stone Cold where they confess their respect for one another and one of them manages to let something slip that the other takes personal offense with (Punk's straight edge lifestyle would be the obvious choice). And with the utmost professional respect put aside, the seeds are planted of a personal disgust for one another and the fued kickstarts from there, which is exactly what's happened with Rock and Cena except the latter has been brewing slowly for years.
If there is one point I could argue against the fued from a story perspective though, is that Punk would have to turn heel again for it to work. Even if just temporarily. But imo that would still hurt the continuity of his character.