The first interpretation, if you use the same style window the opening area could be reduced if that is the largest size window that will fit in the rough opening. If a different style window is to be used it must provide an opening size equal or greater than what was existing
In Chapter 3, the code gives a person 3 options of compliance - Prescriptive (chapter 5), Work Area (chapters 6-13) and Performance (chapter 14). Do NOT mix the different criteria found in these areas. Chapter 5 is different then what you find in chapter 7. That is why it's important to know from the owner, what means/method they are trying to comply with.
Saying that - I agree with the basis of Michaels comment.
I agree with those above.