Just because they played Defying Gravity in the background does not automatically let the general NON-Broadway movie goers that it is a musical. Nowhere in that trailer alludes to it being a musical. It just comes off as ANOTHER "Wizard of Oz" movie from a different studio. Believe it or not, but there are people who don't know the musical exists, let alone the book
And no. The issue with Into the Woods was that it was complete crap & Disney made unnecessary story changes. You don't need TWO 2hr movies to tell the same story that the stage production can do within a roughly 2.5hr timeframe. Thankfully the original stage production was filmed. If people can sit through Gone with the Wind, Titanic, Avatar, LOTR, or any other 2+ hr movie, this being split is just ridiculously unnecessary.
While I'm not a fan of the musical, Universal had no issue releasing Les Miserable as one film. I want to pretend it doesn't exist, but.... CATS.