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Yes and look at what third party modders have been able to do with Doon, Quake, Duke Nukem 3D, Stalker, etc.

I've just downloaded a mod package for Doom which converts all the textures in 2048 x 2048 HD! Really makes a difference.

Problem is at the moment DS2 is mostly limited to 256 x 256 and will crash if you try a higher resolution texture size. So you're limited in running the game with shortcuts to get higher resolutions than 1280 x 1024. It makes the game look a lot better but obviously it would look even better if the textures were higher resolutions when drawn to the screen by the engine and then upscaled by the resolution of your monitor.

Maybe if GPG were able to survive on their own they may have eventually released the source for the Siege Engine but now that Square-Enix owns the rights to the series there's absolutely no hope of that ever happening. So either there's a genius coder like Lucius with the XLEngine and Elder Scrolls Daggerfall, who can reverse engineer the game to create a new engine to render everything (probably even less likely than Square-Enix ever releasing the source considering that DS2 is a lot more advanced game than Daggerfall was) or some equally clever coder can design some hooks into the engine through dlls or the like which would allow it to display HD textures like been done with Final Fantasy VII.

I really, really would love to see a HD version of Dungeon Siege I and 2 and the expansion packs and would gladly pay full retail price for it but sadly I can't ever see it happening.