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If you lose your original app signing key, you can generate a new upload key and register it with Google to continue updating your app. If you generated a new upload key: Use your new upload key to sign app bundles before you upload them to Google Play. Google uses the upload key to verify your identity.
For those who seek key upgrade in 2021: Go to Console => Select an app. Go to Setup => App Integrity. Somewhere in the middle of the page you will see 'Upgrade your app signing key for new installs' and the link.
Delete the existing project on the Google Play Store - the key it has does not match your new one, and there is no way to update it. Create a new project on the Google Play Store. Upload your project to that.
You are correct in that you will have to release this as a new application with a different package name. You will have to pull the other app from the Market as it will no longer be updateable and your users will have to redownload the new version of the app.
I don't see any reason why Google would have any issues with this, it's a known issue that some developers/companies can come across when they loose their signing key. Also, as far as I know, Google doesn't closely monitor incoming apps unless they are being flagged.
I've seen some apps that have 10 versions of the same app in the Market, just so that they can have more visibility, which is something that I think Google needs to look out for.
If you just forgot password. https://code.google.com/archive/p/android-keystore-password-recover/
If you replaced the existing key file. 1.Rename your package name. 2.Generate new signed apk but this time keep copy of the key and never lose it if you want to update your existing app.
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