How much is the game held back by technical constraints?

[Jeeqbit]

I was under the impression that SE used an extremely modified (to the point where it is no longer Crystal Tools) version as the basis for the ARR engine.

The Luminous Engine, as far as I can tell, was used for Final Fantasy XV and ... Forspoken?

The entire point of getting rid of 1.0 and remaking the game was to not use Crystal Tools. It uses a different engine than Luminous, but it's similar in structure. Some of the people working on FFXIV at the time had worked on Luminous.