My take on this is that Frontier have basically just admitted that they had design flaws/problems with the initial shadow and fog code. This is mirrored by what Ben Parry said quite a few months ago on these forums, that the fog was removed because it was to much of a resource hog. At the time, I assumed that meant Frontier wanted the fog to run on low spec PC's. But now, reading between the lines - my understanding is that the effects themselves are not the problem, but rather the underlying code / implementation is the problem.
This would give a single logical explanation to three issues:
1) Why don't we have graphical options to enable the old shadows / fog?
2) Was the PC version downgraded because of the XBox?
3) Couldn't high end PC's still run the better version of the graphics?
The single answer to this, which actually answers all three questions is; No, because the original code was "broken"!
The review process is looking at ways of bringing those things back with working code.
Just my opinion of course, but in corporate-speak that is what Frontier essentially have just told us (and I can kinda understand why Frontier haven't outright admitted that in direct-speak). I am actually very ok with that...