I haven't played the original version of Ultima V, (just the NES port) but I remember most Ultima games having a party roster. Instead of having to generate your characters upon starting a new game, you would create characters in advance, and bring them in and out of games at your own discretion. So as for the whole idea about adding a seperate difficuty setting, I don't know if it would be necessary. Replay value could depend more on playing with other characters in your roster, as opposed to grinding your higher level ones.

I wouldn't deviate too far from the original rules. I think a true port would be really cool. Although, maybe adding a few extra features (such as an optional dungeon crawling quest?) might give incentive to people who've already conquered the game.

At any rate, it's impressive as hell.