An area doesn't need increased density or amenities for land values to go up. Here in the SF Bay Area, land values have exploded yet many neighborhoods have not changed in decades.
Upzoning allows the owner to build more than one residence on what was a single family property. This might include removing an existing home to build a duplex or triplex, dividing a house into a duplex, or building an accessory dwelling unit on the property.
Urban renewal was typically the government using eminent domain to raze whole neighborhoods to build low income apartment buildings or some such. This also might include using the "Tower in a park" architecture that was all the rage at the time, but a terrible urban form.
By the way, the whole point of streamlining permitting and zoning processes are to get rid of the unreasonable watering down of every proposal because as you state the end result is worse for everyone, aesthetics included.
Also it isn’t just about historic structures, there’s situation like that San Francisco Mission District strip-mall-esque laundromat steps from the BART station, that can’t be replaced because NIMBYs are afraid of “changing the neighborhood character.” If crap architecture like that ends up in the same historic bucket then whoever is declaring 80% of every city as being “historic” has done a disservice to anyone who wants to actually protect historic architecture by diluting the name for their anti-change cause.
Since I like sortition, here's a goofy idea... eminent domain should be of two sorts: adverse and voluntary. Voluntary is bought-and-done. Adverse means we pick some other property in a different part of the jurisdiction, at random, and also adversely posses it. To drive the point home, I'd bias the selection to be directly proportional to value, ie, the more valuable, the more likely to be selected. The lock up in the adverse possession should be no less than, say, 25 years, or the lockup on the original possession, whichever is longer.