Ditch the nu-graphics mode, it looks ugly. Just take a leaf out of the Nightdive playbook and deliver the old graphics as flawlessly as possible in 4K 120fps:
This thing should primarily be about making the original game playable and accessible on consoles, which is a more of a user experience challenge than anything else. Everybody already expects a 25 year old game to look old.
Yeah, that's pretty much the best way to handle these types of games if you're doing a ground-up remake. Instead of trying to drag a 1999 game kicking and screaming into 2005, polishing up the existing assets and rounding off the edges provides a much better experience in terms of presenting an old game to new audiences. Heck, throw some path tracing on it and let the improved lighting carry the weight of a complete asset overhaul; games like Quake 2 look fucking stunning in their path traced versions.