Unless that version of Git is also running on your computer, it doesn't change anything. The problem is with local files, not remote ones

I'm not sure that a server-side rewrite addresses the core issue. Git is designed so that a git fetch pulls the entire repo down. The reason large binary files are a problem is because you are going to pull down the entire history of those files in order to clone the repo. Unless they're also shipping a custom git client (unlikely) then I don't see how they can solve this problem on their end.

edit: Come to think of it, the feature they could potentially implement their side is somehow making it so binary files have their history purged somehow. I'm not a git expert but if they are able to trick git into think the files are new, and have no history, each time they change then I guess that could work.