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My thoughts are that there were scraps and bits of levels that were left out in AO, and some of these were used in AE.
AE uses the same system as AO, all that's changed really is the speech, the level design, and the creatures allowed to be possessed.
The story wouldn't have been a huge problem: Evil comes back to Abe. So what would OWI need to do? Think of another way that the Glukkons could take over the world. I think it was just a way to keep fans happy until they released MO.
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from a technical standpoint... they actually changed a LOT within the game engine, just the final output looks kinda the same and the pc ps1 emulation code was the same
lots of extra new AI etc, simlar file systems though
I'd say they used the AO engine as a base and rewrote most of it