The one area that HW will have trouble with regardless of scalability settings are massive overlapping assets close to the camera... traversing all of the various overlapped geometry instances will run poorly in HWRT in comparison to the lower accuracy SWRT solution. I am not sure if that means they need some sort of merging to occur for that to work better with HWRT or something, but it is a thing to also consider.
I am not exactly sure how common that type of level generation will end up being though. Just overlapping dozens of meshes in a kitbash way is interesting for a demo, for sure, but would a game world really be made that way? Especially for terrain? (Instead of some sort of procedural, heighmap, etc etc thing) I am not exactly sure...
They said in UE5 Nanite presentation, they need to change technology for terrain rendering.