In one way, that's understandable, and there should be help for the devs if they're actually having bad issues about the research and developement about the game.
In the other, it's sadly a normal process whenever in the cinema or Video game industries, and even more in the video game industries because of this stupid course to overrealisms killing art direction in my opinion. You have to do research...and research for that comes...well, there not really lots of ways to get those researches done yknow? Beside it's Mortal Kombat, what else would you expect.
I wouldn't say killing art direction - that feels very much like an overexaggeration. I mean, there are still lots of movies / video games that go in all kinds of art directions. I get your point, though, even if I don't entirely agree with it. CoD's definition of "real is brown" does not come all that close to how DMC's or even MK's take on realism (as a general artform) winds up.
While there is a lot of over-emphasis on realism within quite a few genres and fanbases (and I'm not just talking FPSes here, sport games often fall victim to this: as is the case with FIFA where a sillier, arcade-y futsal mode could be introduced without much hassle) realism has a very long history behind it precisely because the general feeling of evocing real life is a very alluring one to a lot of people - and sometimes is the point of the genre. To try and replicate something real (again, FIFA and other EA Sports games' premises run on this, as does Konami's PES). No matter how realistic or not it actually winds up.
As silly as it may seem to look back upon now, Overwatch did get a lot of praise and attention initially because it averted the "real is brown" trope.
The Mortal Kombat series has evolved past those old games though. Now the Gore is the selling point, and
it's gotten so bad that Artists are getting PTSD from working on it. Representing old games would be the way they would go if Scorpion somehow got in, but when it comes to it's lack of presence in japan it certainly stems from MK9 onward.
Again I agree that representing the older games would probably be what they go with if Scorpion somehow made it into smash.
To me it seems like the NRS era has been about taking the idea that Mortal Kombat is "the gory fighting game" and Flanderizing it. In the classic games, gore could only be seen if a Fatality was performed, and the PG-13 movie, kid's cartoon, and live show meant they had to show there's more to these characters than gore. Nowadays, Fatalities are far from the only way to see gore in MK, and the gore has gotten detailed enough to require artists to look at pictures of real gore.
I'm not entirely sure on Flanderizing, especially since NRS has taken more interest in the story and character interaction. I'd put the blame more on the new game-selling mechanics (X-Rays, Fatal Blows) and going for quite a lot of over-the-top Fatalities to the point where some of them involve throwing everything and the kitchen sink at the opponent's body. I'm not sure how long they'll be able to produce such Fatalities, but sooner or later they might wanna scale back because there's only so many ways you can go over the top (not to mention the artists' sanity).