I relate to you in that flattening the island completely would not help me figure out how to terraform it. There's nothing to work off of except a blank canvas, which in and of itself doesn't spark inspiration of any kind. You have to know what you want to put on that canvas first; often that means sketching a draft. So, provided you decide not to reset, I definitely second the island planner website so you can play around with the ideas/vision you have for what you want your island to be.
In my case, having opted to take it slow day by day and work with the natural landscape, it's helped me because I've let my map shape my abstract ideas into concrete solutions and areas, and that's part of my island's character to me. I don't work off of blank canvases; I'm much better at taking the limitations/rules I already have and finding the best way to work within them. While you have a lot to lose and nothing to gain from restarting except the ability to take that different approach, depending on your perspective on how to play the game, that might be all the difference you need, as long as you can find a map that you like and that inspires you. You will eventually get everything back and more.
On the other hand, sometimes restarting can be not as magical as the first time you played NH, because you will notice everything about your new island that was better on your old one and that can weigh down your feelings about the new one if you let it. If you decide to go on a frantic search for the perfect map, that will affect your attachment as well. Boils down maybe even to life philosophy - do you accept the imperfect map that comes to you more readily as long as you believe you can make it work and stick to that idea, or do you push through to find the perfect map that won't give you trouble putting down exactly what you want, exactly the way you want it?
