Great points. I think staying within your means definitely has its merits as well, but on the other hand I'm happy to see smaller studios finally getting out of the pixel era and into more modern stuff. Frankly, that's the big benefit I see about Unreal Engine. Having so many prebuilt assets in the store to allow you to fast forward the parts you don't want to spend time on and focus on the parts that make your game stand out. This particular video makes it tough to see what exactly makes the game stand out though, which I think is why it's getting a lot of flak.
I also think that when we see super early proof-of-concept videos like this, there's a non-zero chance they're trying to pull a "Lost Soul Aside" or a "Shenmue III" and shop the game around to publishers that will help fund/develop the title in order to get it made. But in order for Publishers to notice, you're gonna need some metrics that show that there is an audience for the game to begin with. There are few fanbases out there that are as passionate as the FROM/Souls fanbase, so it seems as good a target as any.
Anyways, maybe I'm entirely wrong and this is just vaporware or a cheap cashgrab after all, you never really can tell. I just think it's interesting thinking about what's going on behind the scenes sometimes.