It has, the Torna the Golden Country engine, which itself was a clear upgrade from the base Xenoblade 2 engine.
Or the current engine of the Studio in it's current state, they will not have stopped developing it/optimzing it for Switch after torna.
In Torna – The Golden Country, we're using a new engine to render the game. While we're still in the transitional period of refining it for use in future games, the differences are still slightly noticeable.
I would agree that they use a more modern engine for the remake. In the scene where Shulk lies in the grass and looks at the dragon-fly you can see a similiar effect to the "colour bleeding into environment" effect that surrounded Torna characters (perhaps to simulate a depht of field effect), just more decent and perhaps more refined. You see it on Shulks cheek and the Dragon-Fly. Also the lighting and shaders remind me of Torna quite a bit, although they use less flashy colours etc.
But didn't Monolith retool the rendering pipeline for Torna? I thought that meant performance would be better. Is that not the case?
They are developing the engine for future games and yes Torna used a bit more modern variant. Performance was better and i think resolution in handheldmode was a bit better, but not by much. That doesn't mean too much for this game though as i doubt they stopped optimizing the engine. We will have to wait and see though.