First off, an engine upgrade is not going to happen, it would require a complete reworking of the entire game which is completely impractical. Badspot is a businessman, not a volunteer worker.
From a money standpoint, no, it shouldn't happen.
A lot of the limitations come from the limitations of torquescript. If you change that to something more capable, you break everything, literally everything, in the process.
Breaking literally everything would basically break the whole development community. From a community standpoint, no it shouldn't. It will only further the games inevitable fade into obscurity.
But, for the few that stay, for the few that continue to develop and innovate, it will be better.