A game engine is not a closed box product. You don't take engine X stick your models and and behaviour routines into it and send a disc to the player.

Crystal tools was a very ambitious project to create and all purpose engine so that multiple Dev teams working for SE wouldn't all be reinventing the wheel all the time.

With FFXIV I think what probably happened was that they used the base crystal tools engine that is used in FFXIII etc in it's entirity rather than examining what it did well and what it didn't do well with regard to an mmo and rewriting those parts. As mentioned before specifically the engine appears to have no level of detail culling and instead has a very dirty solution just having a hard cap on the number of models it will display and for an mmo that's especially silly as it makes towns look empty etc. If PCs with their massive amounts of RAM have this problem the PS3 version would have just been a joke.

It states that they plan to rewrite the render probably to include level of detail scaling so that is uses lower poly models and lower resolution textures for objects and characters in the distance. At the moment it only scales back world textures in the distance. Scaling back shadows is also pretty likely.

From the stuff about model conversion and the fact they are letting us remake our characters we can assume that the models are going to be converted or remade for this new engine. My concern is that the FFXIV models which are some of the most detailed in any game will butchered by this process in the name of making the game console compatible.

Otherwise it all sounds good. A new renderer with LOD support and taking advantage of newer better engineering efforts from the luminious project is great news. The lighting from Luminous looks amazing so hopefully we get some of that.

What I was getting at tho is that what we commonly call an engine is a huge collection of blocks of codes that are heavily interrellated but have destinct functions. They can and will be swapping out and optimizing these blocks rather than starting from scratch.

The Render will include Shadows, lighting, texturing and shader portions that could be replaced or optimized.
Core logic
Animation
NPC behavior
Positioning
Loading and streaming of assets from disc to memory are also major Engine blocks many of which will stay crystal tools based because they are working as intended.