Having a vested interest in this (I live in Castle Court overlooking the ground) it is in need of modernisation.
I can remember the problems involving the WRU and the CRFC during the construction of the Millennium Stadium hence the remnants of the old National Stadium still being visible and Glanmor's Gap.
It's a nice thought to create a new facility but a roof is hardly required with their new expensive playing surface and although 15,000 is a nice round number the ground is rarely full to capacity.
Apartments are highly unlikely on any part deemed to be the Arms Park as I believe the covenant states the area must be used for sporting activities for the people of Cardiff. Maybe someone else can enlighten?