If it is a complete redesign I will archive the entire project (copy the whole project folder to the archive location and/or backup offsite) and then start modifying the original files as necessary. It's totally up to you and what works for your company though.
It depends on how you would restore the file if you needed to revert. If you would restore it to the original directory, under the original name, you would not have to do anything. If the Xrefs are attached as Full Path there should be no problems with the archived file unless you move the Xrefs. The shortcuts are also full path so the drawing should find them even if it's moved as long as they are in the original location.
If all else fails you can use the Data shortcuts Editor and repath the xrefs. I just tried opening a backup of a drawing stored on a local drive and it found the shortcuts and xrefs no problem even though the original was on a network drive and the xrefs and shortcuts file still are.
One thing I found out the hard way. Don't backup your shortcuts to a folder below the project folder. I had recently backed up the _shortcuts folder from just below the project folder to <Project>\Archive\_shortcuts\.befor changing the paths to the source drawings. When I tried to use the Data Shortcuts Editor it looked like I still had all the old shortcut paths as well as the new ones. I backed up he ones I thought I had change and tried again. It got worse. Now I had many duplicate shortcuts. It wasn't until I realized that each time I backed them up I saw them multiplying that I figured out the Data Shortcuts Editor was finding all the backed up shortcuts too. Once I moved them outside the Project path the problem went away. So don't do what I did.
For a major revision such as described in the opening post, we typically use the "Publish" - "e-transmit" route and save the contents to a CD or a USB thumb drive. The USB thumb drives are cheap and easy to store and so are becoming the storage mechanism of choice.
My experience is that Acad will find the subfolders, x-refs and data shortcuts that link to the project files. The e-transmit pull-down has a nice directory tree structure that will provide visual feedback of the files / folders that are being collected. We have tested this with sheet sets and all the project data restored as expected.
If another end user is going to receive the files, they may have to re-path data shortcuts but that is not too involved.
With most of our small to mid sized projects, the design and design labels are in 1-3 dwg files and they get xrefed into the sheet files with the base topo and existing parcels. When major revisions arise we open the design files and rename to mark the revision. We modifiy these files. Then we just swap the xref's and add a revision date to the sheet.
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