Tropical Freeze is an gorgeous. It pushes a rock solid 60fps, and every stage is super detailed in asset complexity and scene depth, namely layered backgrounds. Each stage is enormous in length compared to Returns, and almost always jam packs a ton of variety art assets and contexual set pieces an singular stage flow without interrupting with loading screens. It uses an impressive fur shader on Donkey, Diddy, and some enemies. There's a healthy dose of normal maps and ambient occlusions where needed. Nice use of specular surfaces.
It's a technically impressive game, but probably doesn't impress as much due to Retro's chosen art direction, which draws a lot of similar texture styling and geometry proportioning to Returns. Sometimes the lighting can look a bit "flat", but I feel that might have been an aesthetic choice for the sake of visual readability during play (which is exceptional in both games), or a technical hurdle with the current lighting engine and maintaining 60fps.
It's impossible to say what engine Retro would build Prime 4 on, and anything at this point is conjecture from almost nothing. Especially since Nintendo is traditionally not very transparent about their engines, as many are internal and evolve between titles.
That being said I'd prefer they didn't use Unreal Engine 4. It's a great engine but I'm yet to see a game on Switch that doesn't suffer from blurriness from the engine, and I refuse to believe it's as nicely optimised for the hardware as some of Nintendo's own internal work. It's a good middleware that produces very fast results of modern effects, so Retro may go there, but who knows.
It'll be interesting if Star Fox GP (or whatever they're work on) comes out, and how it looks.