This one I think is so obvious I really can't comprehend why this is NOT what the current state of affairs is.
You have a Multiverse.
You just had this big crossover all about the joys of the Multiverse.
You have this group of heroes who exist in their own universe, whose existence almost definitely presupposes that there is no Justice League or Superman or whatever in it.
That seems like the perfect usage of the Multiverse, and that's what I'd do with the Milestone heroes. Have them on their own Earth and have them crossover, JSA-style, with the JLA. And if people want to tell stories using the Milestone heroes, you'd have a whole separate Earth to tell stories with them.
And if you want to put Static on the Titans, then that's totally fine - just how Black Canary ended up on the Justice League back in the day - have him crossover Earths.
Making Dakota a city on the regular DC Earth takes away a lot of the uniqueness of the Milestone Universe.