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It seems like the big change is that the light sources now actually emit light so the scene becomes a lot brighter. Maybe part of the process should be turning down global illumination? That might make dark corners even more dark however, and "hidden" clues that were supposed to be difficult to see may become outright invisible.

It seems you'd certainly be able to go in and just tweak the lighting without doing all the AI touchups, texture upscaling, and model swaps as they did in the video. Pretty wild stuff, either way.

It ended up looking similar to Oblivion. So I'd wager a guess that it was the intended aesthetic, only limited by the older technology.

The only authority here would be the original designers.

It is true that it changes the aesthetic a bit, and it is a change rather than a straight upgrade.

But the old rendering pipeline still exists I guess, and the new one look wicked cool.

Don't read too much into it. It's a tech demo for a tool. Modders are supposed to make those decisions.