I know for a fact they are looking into doing this, but here is what I think they should do:
Release it all in episodes. Instead of having a release of Shenmue I and Shenmue II or whatever, have a similar output to how the series was supposed to go. Since Shenmue is so massive, I think it is entirely acceptable to release half of the first game for about 400 Microsoft points and then have the other half as Episode II. Since Shenmue II takes pretty much right after the end of the first, it would be easy to make the first part of that as Shenmue: Episode III.
This way the game can still potentially get updated into "Shenmue III" with nowhere as much strain as a retail game would need as a massive graphical upgrade would not be necessary at all. If they are worried about losing money, they can just make a new episode shorter than another.
They are not getting that Oddworld enhanced port due to limitations via XBLA.
I was really surprised they did not make it a disc release as a lot of it is actually remade from the ground up. Really strange as the game looked fantastic to begin with.
Microsoft is going to change their limit again soon anyways. The biggest reason it is still fairly small is because the majority of owners have 20-60gb HDDs.