Vaughan told the Otago Daily Times the planned improvements would enhance the ground as a test venue.
But even with an improved capacity of 6500 - up from 3000 - the ground was not viable for the likes of the Chappell-Hadlee series.
"The planned changes are extremely beneficial and will assist Otago Cricket attracting larger international games," he said.
"It certainly keeps the University Oval as a really tangible option for hosting international cricket.
"But with that sort of capacity, you would probably struggle to justify holding a Chappell-Hadlee game or perhaps an English ODI."
Asked what the capacity would need to be, Vaughan said there were no magical numbers.
"It is all to do with what the other available facilities are."
As a general guide, a crowd of about 12,000 for a mid-week game would be a good result, and a weekend fixture could attract as many as 20,000-30,000.
The University Oval was suitable for one-dayers against some of the "smaller" cricketing nations, he added.
But more importantly, it was well placed to push for high-profile test opponents such as Australia or England.
"Certainly, a capacity of 6500 is adequate capacity for holding test matches against the larger tour opposition that we have."
Vaughan has reservations about the standard of accommodation in Dunedin, adding some touring teams had higher expectations.
But he did not believe that would count against a bid.
On the field, Vaughan is delighted hitting a six at the venue will take a bit more effort in the future with the smallest boundary expanding from 52m to 62m.
While it is still not a huge hit to clear the ropes, it is a welcome improvement, he said.
"We really felt that the dimensions of the playing surface needed to be expanded and there were also adjustments needed to be made around the media facilities."
The University Oval has hosted three tests - Bangladesh, West Indies and Pakistan - and a one-day international against Bangladesh earlier this year.
