Look, I also think UE5 would be inadequate for ED, at least not without some serious rework, but some of the stuff I read is ridiculous.
- What happens when you put it into a fully dynamic star system (all planets in Elite are moving and rotating with true scale distances)?
That's not super hard to do. Planets in Elite are on rails. Most of it is calculated by the stellar forge to being with.
- How much variety would you get when you need to populate 400 billion star systems?
Wouldn't be too hard to get more than Odyssey

Most of them follow the same pattern, with only a handful being actually rather unique.
- Vegetation, etc. is still 'hand placed' (with a very big brush...), the building is hand placed, etc.
Building in EDO are also hand placed (the settlements and PoI are pre made, then randomly placed in the game). Ironically, vegetation in EDO also look like someone used a big brush to put some spot here and there.
- Elite simulates tectonic movement, material composition, exposure to asteroids, position in the star system, temperature, atmospheric pressure, etc.
Actually no, it doesn't. None of that ever happen in game. Sure, we get some pre generated "fumarole" assets here and there and "volcano looking" hill on some world, but there is no tectonic or anything else. And atmo doesn't do anything, for flight or otherwise. It's just a fun bit of trivia and a pretty skybox. Also change what kind of plant (all pre made) are in the game world, if any.
Unless you ever saw an earthquake (planetquake ?) or an active volcano (not a premade asset randomly dropped on a world), then no, there is no tectonic.
This is all stellar forge, which essentially pre generate a fixed universe (with the exception of celestial body orbits/rotation).
Stellar forge would likely work with any engine it's attached to, it's "just" a proc gen engine.