PS4 conversion is what they are working on now. No other way around it.
Might be a decent showcase for new hardware though, if graphics have properly evolved from what was last shown. Beats Halo 5 for me that's for sure.
Are they competing on any level? I did not know that Halo 5 is about problem solving, or that Last Guardian is about competitive online matches.
I am not afraid that it will not look great: Shadow of the Colossus had an epic feeling in the visuals even with the horrible framerate. The quality of that game easily managed to stay relevant with another generation appearing, so if that is what they are aiming for here again, then there will be no issues, even if it is a late PS3 software, not a PS4 launch title.