Sure is pretty.

I tried the demo. The thing that killed it for me was that it completely lacked any sense of speed. I felt like I was flying around in a hang glider. It just felt so damn slow.

I don't think the HAWX engine would work particularly well in a realistic sim though. Not necessarily because the maps are small, but because of the visibility that seems to be about 20km at real scale whereas a genuine sim is typically around 4 times that (as LeemzHQ has found out this is concealed by adjusting the speed of the aircraft). So the issue would probably not just be the size of the entire map but mainly the much higher amount of terrain which would have to be rendered at any given time.

That said, I do think many sim developers nowadays have skewed priorities in terms of spending available graphics resources and it is indeed the terrain (more specifically the mesh) which gets the short end of the stick. Look at ED's (no doubt very beautiful) work, the terrain elevation model resolution even in DCS A-10 appears to have changed very little (if at all) from when LOMAC was released in 2003. Over the same timespan however, the aircraft and vehicle polycount has increased by about an order of magnitude! I seriously think aircraft and tank 3D models in ED's sims have long since hit the law of diminishing returns - the Hornet model in LOMAC was damn near as good as a flight sim 3D model ever needs to be and that was, what, 15000 polys? Let's be generous and allow 30000 to smooth rounded shapes and small details even more, but I genuinely fail to see the rationale for polycounts in the hundreds of thousands when there is still so much room for improvement in the terrain graphics.

I'd much rather see a much more detailed terrain mesh and/or ROF style 3D trees rather than the HUD camera housing and 3D boundary layer air vents on the engine intakes. After all, I'll be looking at the landscape far more often than at the external aircraft model (certainly it's pretty rare that I zoom in close enough to notice details such as those I mentioned).

The distance in general looks fine (but how does that work together with the sim factors when adding modern radar?) but you can tell there are limitations when you look at those first shots in the mountains. Photo real in the immediate area, but in the distance...you can see for yourself.
Still, I'd sure like to see a sim work to incorporate this.

Do the HAWX2 2 objectives have you taking off/landing or all airborne like the original?

I haven't finished the game, but most have had take off or landing at the end, some have both. There was a carrier landing in there. Landing is pretty forgiving, but still fun.