You look at the concept art that was released for the cancelled reboot and the problem I see is not with the overall art style but specifically what they tried to do with the presentation of the characters people so fondly remember. I think the correct approach would be to present the characters of Jak and Daxter in the CG-like art style captured in the wallpaper for Jak 3 below. It would be a natural evolution for today's current graphic fidelity:
There is no need to re-imagine the characters in the way they were trying to do in their cancelled reboot. The level of realism in the above picture is ideal - more detail could be added to this even still, but the core of the artstyle (of the characters specifically) should not be changed. You can also see an animated version of this type of CG artstyle in the Jak 3 commercials:
If they were to reboot Jak & Daxter, I'd like for them to maintain an art style consistent with the PS2 games. As you said, the wallpaper above is a good reference point. They could add more "realistic" details for things like cloth, hair, fur, and the lighting and physics that would be associated with them, but don't alter the character designs
at all. Use the same design style with the same physical proportions, unlike the "Jak 4 concept art" that apparently threw all of that out the window.
If the current team at Naughty Dog doesn't feel confident that they could produce Jak & Daxter to fans' satisfaction, then I would recommend handing it off to Insomniac, as
Hudo
suggested earlier. Insomniac already did a great job with their PS4 version of Ratchet & Clank. Although the original J&D wasn't "their" game, they have proven that they are capable of adapting other people's characters, as we've seen with their Spider-Man games. Insomniac also has historically had a close association with Naughty Dog (probably even closer now, since they're now both under the Sony umbrella), so they should be able to tap into their contacts at Naughty Dog if they need help maintaining consistency with design or story elements.