I don't think it is an "either or" - and there is merit to some level of development/intensification as a way to revitalize the Ex. Personally I find Plaça d'Espanya proper a relatively unpleasant part of Barcelona to model after. Sure, the axis down from Montjuïc/MNAC/Font Magica and past Fira is nice - but the roundabout and the urban landscape at the end of that is wanting in a major way.
AoD
Fine, maybe more the area south around the north slopes of Montjuïc, which has a nice mixture of urban institutions and parkland (and an ceremonial axis not dissimilar to Prince's Boulevard).
The problem with the EX at the moment is that it's marooned in a rather unforgiving tangle of roadways, back-of-house space (mostly to the North), and undefined 'green' space (really more the shards left behind from Lake Shore and the Gardiner)- which physically and psychologically isolates the Ex from the rest of the city.
I would say that redevelopment could be useful as a ways of knitting together the city and the Ex back together, and that some level of redesign of Lake Shore could be done to free up some space for redevelopment (possibly even over the Gardiner in the west). Ontario Place's parking lots, as suggested before, are also a good candidate for redevelopment.
However, I personally would stop short of redeveloping fully inside the Ex proper; to do so would (IMO) surrender what could be a good civic space to the private realm.
Just a quick mockup off the top of my head of where I think possible areas of redevelopment (red) and redesign (yellow) could occur, that would retain most of the integrity of the Exhibition Grounds.
To the West- I wonder if the ugly anti-urban tangle of the Gardiner and the Lake Shore could be redesigned like at Six Points- though it may be difficult due to the ramps. This may also offer the opportunity to create a new gateway to define the Ex's eastern boundaries.
To the South- Redevelopment of the Ontario Place and some of the Ex's parking lots as a mid-rise mixed-used community; transformation of Lake Shore into an urban boulevard.
To the East- The slivers of land around the Gore Pumping Plant and the Lighthouse are too small and fragmented to be successful parks. I would redevelop the spaces to better define the urban edge, while also improving connections to Coronation Park. The Armory presumably stays in place for now.
Yellow spaces could potentially be redesigned/redeveloped as parkland/parkades (to reduce the surface parking), with potential space for future institutions.
Blue spaces could be improved pedestrian crossings/intersections stemming from a slowed Lake Shore.