This is pretty neat. There have been multiple attempts at something like that in the past, and of them, this is by far the best-looking one.

However, I think some artefacts can never be properly resolved (see for example the marble statue to the left at 1:53 in the video), which makes it look veird and break immersion (also the flat roofs that are supposed to be slanted/angled roofs)

Also, the U7 engine is a very complex beast so to properly implement it will take a lot of work and fine-tuning (although I guess they can use Exult as a start, which is by now pretty feature-complete)