Answer - Because UE5 has no Tessellation feature, CC3Plus looks blocky in UE5.

Now, allowing for export of a subdivided CC3Plus is one way of bypassing the Nanite driven removal of Tessellation in UE5.
But, another more interesting and fun way to update the quality of RL characters going to UE5 would be to have an option for the user to model an HD version of the character in CC4, with all the extra detail elements that don't exist even with a subdivided CC3Plus.  
As a comparison, imagine the extra definition that Daz's subdivision allows characters to have - Not only are characters able to be smooth, but extra detail morphs are able to be applied onto the subdivided character.  So, you get (1) smoothing, and (2) extra detail, all off of an original lower poly base model. 

In use, an HD character would probably cause performance issues in iC8 for several reasons - (1) it would weigh down the engine, slowing down everything else going on in the scene due to higher compute requirement, and (2) it would reduce functionality of real-time Live Link animation streaming because it is too compute intensive.

So, one consideration is to link a user low poly character with a corresponding HD character, such that the low poly model paradigm be maintained in iC8 for animation, with an "export-ability" to export the higher version model as part of an Alembic, FBX, or LiveLink Export.
Imagine running a scene in iC8 with a low/regular-poly character, and then upon export of the animation to UE5, it offered you the option to supplement an HD .iAvatar in place of the low-poly one, as part of the FBX export, such that you can enjoy the animability of iC8, with the HD-ability of UE5.
Or, when you would LiveLink an iC8 scene over to UE5, the transfer file dialogue would allow for you to replace your animated regular-poly character in iC8, with the HD version .iAvatar that you saved in CC4, when the LiveLink plugin sends the data over to UE5.

Of course if iC8 got some major update that allowed for HD characters, that would 'render' the subject moot. 
But in absence of this, to RL, and other users imagining what an HD character experience may look like in iC8, just my 2 centaurs on the subject of HD characters with HD details beyond a basic subdivision.