Seems like you've made your mind up on the Milgard WoodClad but if you're open to more options I'd look into Integrity Wood-Ultrex. I've seen the Milgard WoodClad and it's a very ugly window on the interior and have actually had customers unhappy with it and ask for a different product to replace it after they've been installed (I didn't sell the Milgard). It's looks like a vinyl window with pieces of wood glued onto the inside.
Integrity Wood Ultrex actually looks like a wood window with solid wood parts on the interior.

As far as your question. I think full window replacement is preferable. If someone has stucco on the exterior they tend to want to do a pocket or insert window and that's probably the only time I think it might be more appropriate. They shouldn't have to reframe an opening however unless there's some sort of damage to the wall or limitations on sizing from the window manufacturer.

Another vote for the Milgard Integrity if you are still looking.