It certainly is possible, with static meshes at least. Nanite shows that. I would not be surprised if something similar was possible with skeletal meshes in future too.
I understand Epic’s choice to deprecate tessellation in favor of Nanite. It makes sense for high detail objects.
The problem is that it omitted some other use cases for tessellation, such as landscapes. It’s not feasible to import large terrain mesh with similar up close detail to landscape material with tessellation. It would have multiple terabytes and would eat up all the memory.
That being said, my hunch is that since the motto of UE5 seems to be “virtualize ALL the things!!!” (Virtual textures, virtual geometry, virtual shadowmaps, virtual lightmaps), I would not be surprised if virtual landscapes were next on the list. We already got virtual heightfields, so it’s just one step from there to make landscapes use them natively. They’d provide both better quality as well as better performance than tessellated landscapes.