The first major improvement is going to be the user interface. The old Baldur's Gate interface was created around 640x480 resolution. Even with BG2 the user interface still had elements which were locked to 640x480. We are going in and re-writing the UI system to work for multiple larger resolutions and we are using the iPad 3 (at 2048x1536) as one of our target resolutions so the new UI is going to look amazing. One of our other major improvements was to convert the graphics completely over to OpenGL. By using the hardware present in all devices, we can run BG at higher resolutions and run it faster and smoother that it ever could before.
Our third major enhancement is the addition of the ability to zoom in and out dynamically during gameplay. Zooming out allows the player to be more tactical in the positioning of their party. Zooming in allows the player to search the environment in detail and have greater precision with actions. With regards to the background art and character art, we are limited in what we can do from a purely graphical context as the original art assets were lost. Since we have no 3D models or textures from the original games to go from we have to make the best of what is available.
We are currently researching a few upscaling algorithms to try and improve the quality of the existing assets. We are still experimenting with the game and testing out various ideas on how we can further improve the existing content, but we also took the feedback from MDK2 HD to heart and are focusing our content creation efforts on creating new content, not just prettying up content you have already played through.