The renovation and revitalization of vernacular architecture are pivotal in sustainable rural development. In regions like Shangri-La, traditional structures not only safeguard cultural heritage but also provide a foundation for enhancing local communities’ living conditions. However, these villages face growing challenges, including infrastructure decay, cultural erosion, and inadequate adaptation to modern living standards. Addressing these issues requires innovative research approaches that combine heritage preservation with the integration of contemporary functionality. This study employs a research-by-design approach, focusing on the Shanpian House as a case study, to explore how pre-planning and post-evaluation methods can revitalize traditional vernacular architecture. The pre-planning phase utilizes field surveys and archival research to assess spatial, cultural, and environmental conditions, framing a design strategy informed by field theory. In doing so, it evaluates how traditional architectural elements can be preserved while introducing modern construction techniques that meet current living standards. The post-evaluation phase, conducted through questionnaires and semi-structured interviews, assesses user satisfaction, focusing on the impact of architectural esthetics, structural stability, and material choices. Key findings from an OLS regression highlight the strong positive correlation between architectural style, structural choices, and cultural relevance with resident satisfaction. The research emphasizes that design elements such as structural details, materials, and infrastructure upgrades are critical in shaping perceptions of both functionality and cultural identity. Interestingly, the model reveals that improving architectural esthetics, alongside modern indoor features such as network connectivity, has a significant impact on enhancing overall resident satisfaction (significance level: 0.181). This study contributes to the broader discourse on sustainable building renovation by demonstrating how traditional architecture can be thoughtfully adapted for contemporary use and also proposes a paradigm shift in the renovation of historic buildings, advocating for a balance between preservation and modernization. The application of sustainable materials, digital modeling, and innovative construction techniques further ensures that these traditional structures meet the demands of modern civilization while maintaining their cultural integrity.