I know it sounds like a highly technical feat, but Divinity: Original Sin did this mechanic years ago (and improved/expanded it in the sequel). Now, if they were promising permanent changes to the environment, then I’d be right there with you calling their bluff.
Even the claim that you could melt the frozen water to then drown your foes isn’t that technically difficult so long as you have a physics system that handles fluid volume changes. I’m not claiming it’s easy and that anyone can fire up Unity or Unreal and make a game with these systems, but their claims are far from unprecedented.
Edit: I dare say environmental interaction is what made D:OS’s combat so engaging and awesome. If these guys can imitate that in an MMO, it’s going to be at least successful enough to break even on development costs.