Vector2 to 3D world coordinates

The best approach depends what effect you’re going for. Personally I wouldn’t go for rotating 3D models and then drawing that with an orthographic projection (or rotating the orthographic view for that matter) - the brain expects to see the perspective in there. I’d prefer to keep orthographic for 2D games, and perspective projection to give you that 2.5D feel (ie gameplay in 2D but the world looking 3D).

That said, it looks like the new Zelda game is using a topdown orthographic projection with rotated/skewed scene geometry: