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To be honest I fear that doing it in realtime will mean that the quality will take a step backward instead of forward. It's going to be very hard to top the original backgrounds and I've rarely, if never, seen realtime graphics that looked as good as the AO backgrounds.
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It sounds like your nostalgia is making you biased. That video of Trine 2 earlier in the thread proves beyond a shadow of a doubt that today's realtime > 1997's prerendered in terms of fidelity and detail. Watch it in 1080 and then look at a gameplay vid of Abe's Oddysee. I don't think you have anything to be worried about.
The major defining factor in what is going to make our realtime version look good is the artist, they are not all created equal. This is precisely why i'm still looking for an env artist good enough to fill these very large shoes.