Yes, is the rule that if you have an old bulkhead or stone revetment that you can replace it, but any "new" construction where there was nothing before has to do living shoreline?
It's dealt with on a case by case basis. Even if you have an existing failed bulkhead, they'll review the application and the site to try and find alternative protective measures that comply with the living shoreline criteria. There are a coupled of good diagrams on DNR's web site that is dedicated to the living shoreline implementations and it has project approval guidelines well laid out.
I've been told by some of the marine construction company owners that I know that bulkhead construction is almost completely gone as a permitted option these days. That meshes with what is posted on the DNR info site. Our next door neighbor had a composite driven bulkhead put in about 6" in front of his failing wood bulkhead; maybe 3 years ago. The owner of the company, a friend of mine, told me, after I expressed my surprise at seeing the method being used: "that's it...that's the last one of those seawalls we'll ever put in. The permit for this one was pretty old and you'll never get one now".