So what they actually did, was they brought the IWD into the BGEE engine via BG2, just like DavidW did with his mod. As it was their actual pre-alpha.
That's nearly right. I actually wrote the IWDEE alpha from scratch (it's not been publicly released) but it was very heavily based on v7 of IWD-in-BG2. The main differences were
(i) I took out all the hacky conversions of opcodes and projectiles, because I knew Beamdog would be able to sort those out at the engine level (that's where 318/321/324 come from, they're replicating very powerful IWD opcodes not in vanilla BG2).
(ii) I did a systematic remapping of strref entries. IWD-in-BG2 followed the TUTU/EET strategy of just appending the whole tlk file onto the BG2 tlk file, but that's ugly and bloated for a standalone game. For IWDEE, I wrote code to map the 3000-odd lines in BG2 used by non-game-specific resources (spell descriptions, etc) into unused strings at the end of the IWD tlk. If you compare IWD and IWDEE, their tlks are virtually identical up to 35,000 or so.