Yes, Ancelotti should be able to handle the Brazilian national team well. He is experienced in handling teams with star players. For other coaches, it might be difficult to overcome the strong character of each star player. But Ancelotti should not have any difficulty with that. Moreover, with several players that he has trained, it will not be difficult to develop the performance of the Brazilian national team.
I also see Ancelotti as the best choice to revive the golden era of Brazil. As you said, he is very experienced in coaching several Brazilian players and according to rumors, former Brazilian star player, Kaka, will be his assistant later, of course this is something good, especially Kaka was also coached by Ancelotti when he was still at AC Milan.
Ancelotti to Brazil has many pros and cons, many agree and many disagree and even regret his choice to coach Brazil, because for them Ancelotti is time to retire considering his old age. But in my opinion, every great football manager needs to coach a national team to prove that what matters is not only their tactics, but how well you can utilize the players available. You can't buy the best goalkeeper, defender or striker for a country. You have to utilize their strengths and their love for the country they represent.
Not only because of his age. Madrid's declining performance factor is also associated with several comments that disagree with Ancelotti. There will always be pros and cons regarding the arrival of new coaches and players on the team. They will criticize again if his arrival does not change anything. But they will be silent when Ancelotti makes a difference that produces something good for the team. I think that's what Ancelotti has to do to silence those who doubt him.