Very interesting concept. The least daunting way to "remake" a game in this way could be something like changing the color palette per level, kind of like how the Super Game Boy does to some Game Boy games; an effect reminiscent of the color filters used in Nosferatu.
I'm sort of opposed to the idea of "better art" as something that can be achieved on a technical level, though, especially considering the example used in the article (Monkey Island SE), which I personally think looks a lot worse than the original game. If you want better art you need a better artist.
I'm not sure I understand your thoughts about "better art". My idea is to reuse the game logic with entirely new art - with a better artist, as you say. But MISE falls exectly into this category - completely new art, not done by technical means (even if you don't personally like it).
My point is that "better art" could as well be achieved by replacing the original art without modifying the game code or hooking it into an emulator, sticking to the original restrictions. I don't think that the process described in the article necessarily facilitates the possibility of "better art".
On a technical level, the possibly increased resolution and color depth that can be achieved using this method will certainly impose less limitations on the artist in exactly those terms, but in my opinion that doesn't necessarily mean that they will make it easier to produce good art.
On the other hand, it doesn't mean it's easier to produce good art; the idea is that it makes it possible to modify the art at all. This is supposed to be used for games where you don't have the source code.
I'm sort of opposed to the idea of "better art" as something that can be achieved on a technical level, though, especially considering the example used in the article (Monkey Island SE), which I personally think looks a lot worse than the original game. If you want better art you need a better artist.