Great point Janik. It more than likely would be easier to achieve from the mesh construction point, with a few nuances:
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Tile bounds would be adjusted as well in order to ensure proper frustum culling.
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Physics meshes are super expensive to create/manipulate. This feature would more than likely only be usable if physics is disabled, or altering exaggeration is set but not expected to animate between smoothly, at least with physics the whole way through.
A little information I could uncover from the Cesium Native and Cesium for Unity codebases:
Cesium Native calls the engine integration via its IPrepareRendererResources interface (“prepare renderer resources on-demand for the glTF models it provides”). In Cesium for Unity, that implementation is UnityPrepareRendererResources, and that’s where the MeshDataArray is allocated and then fed into loadPrimitive. There are several other steps before and after, but I would say this is the middle of the workflow.
Here’s another related issue on exaggeration on the Cesium for Unreal forum.