I say kudos if they can pull it off. Ignoring the possible meddling of the various device manufacturers, they have their work cut out for them.

I want to be optimistic here; it is just I've never seen such re-engineering done before for any OS.

UI redesign will most certainly take place on the homescreen, the launcher, the dialer, etc. In other words: in it's own seperate applications, this wouldn't conflict somewhere because it's done quite frequently. Android is themeable quite nicely, so even changing the standard dialogs from one style to another _should_ work. My own concern here is that some developers probably have written their own UI code and some custom hacks. But we'll see about that.

UI is about how things work first, about styling second. Themes are not going to help you with the former.

Correct. And i don't think they want to change how things work. The mechanisms how to operate android are fine. Or do you have an example what fundamental functionality should change?