Not a bad idea, but here is what I would do...
Okay it all stats out like it did with the Great Saiyaman thing, but it'll be very short and actually involves Gohan and Videl dating with the annoyances of Goten and Trunks following them, and the Budokai goes as planned, cept Krillin fights Vegeta in the 1st round and loses, Goku ends up fighting Mighty Mask in the first round, and loses intentionally (he knew it was Goten and Trunks), while Piccolo and Kaioshin actally fight, and Piccolo beats the crap outta him! Android 18 wins her first match againest that pretty boy, but she loses to Vegeta, Gohan fights Kibito and pwns him, and Piccolo loses is match againest MightyMask (Goten and Trunks toy with him the whole round and make Piccolo hesitate, but upon winning, their identity is revealed and they are disqualified)
In the final round, its Gohan v.s Vegeta and the two start fighting and are evenly matched when those two buff dudes what are their names come in and jump them both, steal their energy and leave. Kibito heals Vegeta and Gohan, and Kaioshin comes in and explains what is happening. Gohan and Vegeta leave the tournement w/ Kaioshin and Kibito along w/ Goku,Krillin and Piccolo. The audience is angry with the disappointing final match, but everyone else has already been beaten, so Mr.Satan comes up and says he will take on any challenge in the audience, and Yamcha gets all excited and takes him up on his offer! Yamcha toys with Satan a bit, and even goes as far has using his Wolf Fang Fist and Sokidan, but then he is distracted when he notices fangirls cheering for him, and in an rush of rage, Satan charges Yamcha, hitting him the balls, and wins the match lol.
From there...
Dabura kills Kibito
Dabura turns Piccolo and Krillin to stone
Vegeta fights Puipui and kills him
Goku fights Yakon and wins easily
Gohan fights Dabura, and the fight ends upon Babidi seeing Vegeta has evil in him.
Vegeta fights Goku, and Gohan and Kaioshin work at getting to Babidi before Buu is revived. From there, everything else goes like it did in the series. However, I like your idea of their being no SSJ3, so I'll use your idea here! The only thing is, Piccolo, Yamcha and Krillin end up fighting Buu at the lookout to buy Goten and Trunks time to fuse, but fail, everyone dies except Piccolo, who escapes to the Room of Spirit of Time, and tries to lure Buu to come in. The Potara fusion never happens, instead, Gohan comes back like he did so originally, and joins with Goten and Trunks who almost defeated Buu. Gohan and Super Buu begin fighting, but then like so, he provokes Goten and Trunks and they fuse, and absorbs him and Piccolo, and fights Gohan.
Gohan and Super Buu have one helluva struggle, but Super Buu is just a lil bit better than Gohan, and Tien appears to try to save Gohan, but Buu survives after Tien dumps all of his energy into a Kikou and dies. Finally, Vegeta returns, and with Gohan, they both fight Buu, but its still not enough. Gohan thinks back to everything he has been through and what allowed him to surpass his limits, and with some encouragement from Vegeta, Gohan unleashes a huge Kamehameha and Super Buu unleashes his very own huge ki-blast, and the two struggle, and just like in the Cell Game, Vegeta distracts Buu, and Gohan succeeds in beating Buu!
Then after that, everyone is revived, Videl confesses to Gohan, they get married, bunch of years later, they have a tomboy daughter named Pan who is a lot like Goku, Gohan gives her nimbus and Goku's old power pole, and tells Pan to explore the world for herself, much like Grandpa Gohan did when he came back for a day and after fighting Goku
Course, Videl is angry, but Satan takes cover for Gohan, and he gets yelled at!
And Goku is in Heaven having the time of his life, training, eating and fighting old dead villians, and just driving King Kai nuts!
The End! No DBGT!
One thing that was annoying; after the Goku Vs. Majin Vegeta fight they don't seem to use SSJ2 at all (except Goku's warm up against Kid Boo). I would've liked to see more SSJ2.
)
And I know others have stated before me that it's very hard to gauge exactly how strong various characters are, especially during the Buu Saga. I think perhaps keeping the power levels might have helped. I guess Toriyama got lazy with it when he realized as Goku and the others kept getting stronger, that the numbers were going to get 
But he should have either kept them anyway or never had them in the first place. It would have been less confusing for fans then casting it aside halfway through.