For me it means a loss of grandeur.
This review by Clement Crisp tells the story as it should be told.
I can't say that I'm terribly bothered by Balanchine's remakes and redos, which always tended towards reduction and minimalism. That's just the way of the artist, and it's up to the rest of the world to take what they can from the different versions. It does bother me when it is assumed by the 'authorities' that the last known version is THE version and all others should be shunned. That's a total misunderstanding of creative process and art in general.
My issue with the costumes in this particular version of Ballet Imperial is that the movement of the long chiffon dresses is often counter to the actual dance movements. I think a small diameter, stiff tutu would be appropriate: dividing the dancer's body horizontally, and revealing, not disguising, the particular movements in BI. There is an article on tutus that I remembered when thinking about all this. I think that Lopotkina's comment fits well:
"My favorite tutu is the one I wear in the Pavlova and Cecchetti scene from Neumeier’s The Nutcracker. It’s a classical tutu, one that would have been worn by late 19th-century ballerinas in rehearsal. It was copied by Maryinsky tailors from Pavlova’s costume. It is light as air and it’s easy to move in. The classical steps come out better; all the positions line up logically and beautifully."
The caveat being, (and I think I mentioned this earlier), that running beneath the arms of the other dancers could not be performed well in large, stiff tutus. Perhaps that wasn't part of the original choreography?
But anyway, it's not a huge deal to me, though I would very much like to see the older version performed to compare the two.