I don't know if XB3 dramatically changes the picture overall, that game has its own sort of controversy too given how debated the ending is.
I recently replayed Gears and I realized that XB3 is literally just the second disc drawn out to a full game with the religious and metaphysics removed. Just the Solaris 1984 stuff and the reoccurring characters over time. Grahf is just Noah (who is named after Project Noah).

Also this line would fit right in to XB3.
I have my issues with how they are simplifying the trademark Xeno storytelling, they don't ever info dump anymore, now everything is just implied and never outright shown or told, which works for some stuff but for a lot of the technological and metaphysics stuff just leaves a lot to be desired.
Gears needs probably more than just upscaling some jank 3D models given just how old that game is so it takes more work.
Gears aged much better than the pre-rendered background JRPGs of the time. I don't think they even need to change any artwork since its not trying to have a pre-rendered look, its purposely pixel art. I played Gears on Duckstation with depth buffer and vertex correction and the models hold up. I suppose they could swap out some of the lower res Gear models for the higher res ones or something. The only thing that would need upscaling and clean up would be the pre-rendered stuff. I really hope they have the original anime cutscenes on film somewhere, but if they did a remaster it would probably be a bad upscale.
You also likely need/want Takashi's involvement with such a project and he may or may not hold a grudge after getting his magnum opus "Perfect Works" tanked twice across two different companies.
I recall an interview where he said he had no desire to remake Gears, but I'm not going digging for that right now. I don't think a straight remaster or port would need his involvement. I don't think the Cross remaster had much involvement of the original team. Besides, Perfect Works has pretty much everything needed to clean it up anyway, and I'm sure they could get Kunihiko Tanaka to re-draw his character portraits. The soundtrack was already remastered a few times by Mitsuda.
I'm pretty sure the game's engine is close enough to FF7 that they could maybe get a native port like with that old FF7 pc version, but thats just wishful thinking. Of course none of this is probably going to ever happen. My dream is that Square would approach Nintendo to let Monolith remake the game, it doesn't need to be as large scale as the Xenoblade games, but I can see Monolith actually being able to pull it off, second disc and all, it's just never going to happen.