It wouldn’t be the first sort of game that Microsoft has remastered in that style, though.

The Halo 1 and 2 remasters used a separate rendering layer over the original game which included updated art assets, and a setting to toggle between the original graphics and the updated ones on the fly. For the most part it was fine, but there were a couple of (primarily out of bounds) areas where the original collision did not always align with the updated geometry.

But I am hoping that it is more than just a simple rendering layer over the original game, because like you said it would require more hands-on work to improve things like forest density and interior clutter. It would look odd if they just increased the polygon count of foliage while still leaving it as sparse in places as the original. At least based on the leaked screenshots, the side-by-sides do give the impression that things have moved slightly and additional objects have been added, so extra rendering layer or not, my guess is that edits to the original game are also still involved (and likely means there won’t be a Halo-style graphics toggle button).