After looking up the souls quote, I have my doubts that's what Bluepoint is working on. For starters, it wasn't a guy from Bluepoint saying it. It was Colin Moriarty, former IGN senior editor. I don't think he was saying it in direct connection to Bluepoint, either. He said that he was expecting an announcement at State of Play for a PS4 remaster, presumably of Demon's Souls. The thing is, this isn't a simple remaster. This is supposed to be a bigger undertaking than SoTC. A reimagining as Bluepoint puts it. Colin also says that it is for the PS4. Bluepoint is working on something for the PS5, according to the Wired article.
Considering Demon's Souls age, or lack thereof, I think a remaster is all that is needed for that game, possibly for a launch date of 2021 on PS4, since Sony still likes to support their systems a couple of years after the successor launches. I think Bluepoint is working on something from the PS1 or PS2 era. Something that actually requires a reimagining.
Colin said it but choose to use the word soul instead of something else, phrasing it in a way I've never seen someome do, which makes it sound intentional. Why not "the dream is still alive" or something?
Colin also said in a later episode that he thought it was going to be for the PS4, but now that we know it's for the PS5, he understands why haven't them announced it yet. They are saving it to when Sony goes full focus on PS5 marketing, which is later this year/early next year.
I agree that the re-envisioning they mention makes it sound like a PS1 era game, if SotC, a PS2 game, they can remake, the need to rework completely a game means it's something even trickier to work with.
A PS1 RPG feels like a great pick for what we know (they are working on a game that has weapons and armors), for example games like LoD or FFIX, they use images for towns/dungeons backgrounds, 3D models of those simply doesn't exist on those games, they would need to model them themselves based on 2d images.
LoD in special would need a full rethinking of its gameplay if they want to make it one thing only, because it's not either fully turn based or action oriented.
They can keep the addition system exactly as it is too, tho. I would love that but I would love to see at least more additions added too.
Anyway, Demon's Souls can also fit that description too, making it go from stage based to open world, making the last archstone playable, bringing the new mechanics from the Dark Souls franchises... they can make a lot more than just bring the models/textures and resolution to 4K.