I don't have my copy with me so I may have some details wrong, but the Taschen james Bond Archives book explains it:
SPECTRE attacks MI6 and kills M. Bond is framed as an inside man and goes on the run, and Moneypenny is sacked. SPECTRE then replace M with their own man, so they can run the secret service or something. Octopussy runs a spy outfit of her own that's at war with SPECTRE, and Bond teams up with her and an Afghan freedom fighter called Kamal Khan. The villains are Blofeld and the head of his SPECTRE army, Smythe. The pre-titles was in the Netherlands.
Kamal Khan's name later turned up as the villain's, the character of Kamal Khan later turned up in TLD as Kamran Shah, and it looks like literally the entire rest of the plot was recycled for BOND 24!
The Taschen book actually relates a lot of original plot ideas that I've never head of before, and no sources are cited! But it's fun! Apparently TOMORROW NEVER DIES was originally set in Transylvania... the land of vampires and werewolves...
Fascinating stuff--thank you for sharing it. I'll have to save up to buy that Taschen book! As Odd Jobbies commented, that's a very bold scenario. Like the Spectre version of TSWLM, it seems to have been too bold for Broccoli. I also wonder how they would have filmed the death of M, considering that Bernard Lee was already dead.