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Actually, you're wrong; you can improve the visuals by using the textures themselves. There are mods on the forum that do this; I know there are, and it's not so much about the texture resolution as it is about adding details, like armor or vegetation for the Orcs. Regarding Heroes on a new engine, I know that the guys have taken on a big task, and there are doubts about whether they can handle it (unless some company hires them to make a remaster). There's still a long way to go before it's finished, especially considering that the visual style is planned to be identical to the base version of Heroes, and I haven't seen many mods for the game on the Unreal engine.
It's just that if the whole game is moved to Unreal, that would be a huge step forward... then they could make an editor for modding, and people might get involved and implement improved models... but on the current version of the game, transferring models is such a hassle that I don't want to deal with it.