Merric, your more serious pick probably fits the module and what it will take.
I agree with a lot of the above. From my own 3E experience with RttToEE and 4E experience with converted adventures:
I made Hommlet more like the 1E version...no magic shops..and cut back on a few new NPCs. This was just a taste/style thing and also depends on how you use it (it was not a return to for most of the players).
But the NPCs are still key to the adventure. Elmo and Laereth got lots of play (of course), as did the main cleric in town (Terjon?) As with the 1E original, the moathouse is a shock...Blue Dragon!...and pushes the PCs to seek help, for better or worse. So keep some tough, tough encounters there and encourage them to get help.
This means you will need to do some NPC/Companion charecter conversions in anticipation of this. Easy in 4E, but worth noting.
The "steepness" of the math in 4E is a related issue. You may need to level some NPCs at points and want to think about that. The "naturalist" mix of opponents of various levels is a nice feature of the adventure, but you will probably just have to go the standard 4E route--lots and lots of minions, of ever higher level.
Its also an issue as the campaign, at its best, can be very sand-boxy, and you want to play this part up, but again the math part can be an issue. The original module does allow for reinforcing...so maybe more powerful cultist replaced the less powerful ones when back-tracking.
(as an aside, this would be a very natural match for Next...but anyways)
I would keep the CRM, but make it clear that its a bad idea to try to "clear them". They should be exploring for a way forward, this, plus some of the individual parts (which can be really good) can make them worthwhile. But the goal would be for a large part to be bypassed--something to think about as you convert. So you may want to give more hints and options to get to the center, and make progress there. (eventually my PCs used waterwalk...)
For fights, I would use the option of "a lot enemies come out of neighboring rooms" technique. We did this in my 3E game...and it fits 4E (again, minions, lots of minions). It also gives the non-combat option of trying to parlay or sneak past smaller groups, or the smart combat option of picking some off and bypassing the rest.
For the fane and the final node, I would also be looking to trim back. You will have had a lot of game to get there.