If I remember right, backgrounds are completely redrawn, and AI is used to create interpolating frames in between hand-drawn frames for animations (and then manually fixed once the AI has done the bulk of the work). I don't know what they did with the full-motion videos though.

Everyone suspects devs using AI these days. Personally I don't care, "how" they improve the graphics, as long as they get the job done. Modders of course like to use AI to upscale textures, but I'd say that most artists still work with hand drawings. And for the dev it's much easier to explain to a human how the animation should play, how many pixels the char can move (or not), than to a machine.

Did you finally decide if you will keep backing it?

It somehow feels like they "punishing"/cashgrabbing their kickstarter backers/die hard fans with this pricing.
Considering that Return to Monkey Island was priced at 25€ and the recent larry installments either way 30 or 35€ i dont think they will be able to place the game even at a 40€ price point (at least after the really initial release) so 50€ for the initial backers which kinda found the game seems harsh.

For my part while i love point and click and also did some recent kickstarters (like Wasteland 2 and a Bards Tale IV) i just can't justify what they asking for.

Really hope the game gonna be nice and hope that they will surprise with something that will be worth our while (and money :D)

I still have a few weeks :) But it'll be probably a pass, not least because I just bought a new graphic card :D

And yeah, I love p&c too. I recently backed three others :)
And I also like the Broken Sword games, but they are not my favourites.