Yes, it's a tragic story (one that I know very well, as the silent movie era is my specialty).
This is NO EXCUSE for it not working as a musical, however. There are many tragic stories turned into musicals (two that come to mind are Titanic and Carousal). The book needs to be thrown out and another attempt should be made to look at the core of the story - Mack and Mabel, two wildly successful silent movie personalities, have too many personal demons to overcome in order to achieve happiness. The substory of the drama of the silent movie era works fine.
The score is, indeed, beautiful, and I spend many hours listening to it, imagining ways of making this story work on stage. I envision so many silent movie possibilities...all with the same beautiful score.
"My dreams, watching me said, one to the other...this life has let us down."