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Am I understanding correctly that this just expands the Hinterlands, it does not proceed onward beyond the current To Be Continued in the main story?

Secondly, will this be compatible with old Hinterlands saves? If you've had something count as "done" for the P's notebook skip scene previously, will it still count as "done?"

(+1)

It only expands the Hinterlands, it doesn't add content to the main story. HOWEVER, the next update will be main story related.

It's compatible with old saves, yes.