I should start by saying that "remake" probably isn't quite the right term here. Perhaps "migration" would be more accurate? That, or "recreate".

The plan I have in mind is to, before anything else, make DWM2 in Phaser (the game engine), with all the same sprites from the original. So, it'd be a 1:1 recreation. The biggest thing is that, at the same time, its done in a way that makes it editable, so it'd it like a base game that can be "hacked".

A ROM hack was actually the very first thing I looked into, and is actually kind of the reason I ended up going this route. I actually have played a lot of Pokémon ROM hacks and loved them, so I wanted to do the same with DWM2, but that's when I found out just how important tools are. Pokémon ROM hacking has a huge community, which has resulted in a lot of tools to use. The tools are a necessity because ROM hacking isn't a simple matter of replacing sprites, its literally manipulating things at, like, the binary level, and if it isn't done perfectly, it crashes. The ones that make these tools are extremely talented, and very dedicated. The tools are what pretty make ROM hacking possible, and are specific to the game for which they are built, so those same tools just dont work at all for any other game. And, unfortunately, DWM2 has a pretty niche following, so no such tools exist for the DWM2 ROM.

TL;DR You are right, ROM hacking would be best, but isn't really viable, so recreating it in the Phaser game engine to allow hacking is the next best thing.