But for sure air sealing is important everywhere, and this looks like a disaster.
Where is this place? (This duct routing approach wouldn't have been allowed a building permit or passed an inspection in any place I've ever lived/worked.) Got a zip code?
But independent of climate zone, blowing it full of dense-packed celllulose and cutting in a floor return grill seems like the right solution. Using the great outdoors as your return plenum never works in your favor. Have an insulation contractor assess the rest of it too, for both insulation and air-tighness.