Even if it definitely a good thing that so many old posts now may be uploaded in higher quality, i'm a bit concerned about who get the credit for uploading.
In my opinion the original picture should not be deleted, but rather replaced with the new, high-res one. Whether they should be pushed to the top, able to appear in the "popular" area again is a different question though.
The main issue i see in the current system is the fact that the original uploader
A: loses credit for the upload, which now appears as a post from the person that minimal edited the tumblr source.
B: has a lower post limit due to the large amount of now "deleted" posts.
En plus, the whole comment section gets lost.
Thus, uploading a better version of any picture should not change the original uploader.
How exactly this is realized should be left the the admins.
Updated by NotMeNotYou