I think you're assuming inseparability that doesn't exist.
Standard gameplay scenarios can often be prototyped and tested long before an engine's graphical features are complete. You don't need shaders or textures or VFX or detailed model geometry to test stat values or AoE ranges or general level design. Much of what the people working on gameplay systems require to do their jobs can be mocked up in a very rough state even when the rest of the game is very early.
Remember
this version of FFXIII, starring palette swaps of Yuna and Rikku, generic humanoid figures, and literal geometric shapes?
What's trickier is when you have a boss fight that doubles as a setpiece -- say, Leviathan -- but that's because there's basically no way to avoid simultaneously working on the engine and the gameplay. A hypothetical UE4 version of FFXV would still rely on in-house developers to create the framework for that sort of scenario, because UE4 had absolutely no reason to code for a situation where you're 200' above a massive city and able to teleport thousands of feet between destructible pieces of level geometry. The only way around it is to abandon real-time setpieces altogether... but at that point, you're not even making a mainline FF game anymore. And once you're committed to setpieces, your options for dealing with unexpected setbacks are basically a) take the time needed to finish them or b) have a Plan B for dealing with the story if the setpiece never comes together.
Ironically, thanks to FFXV, Luminous is demonstrably better at FF-scale setpieces than UE4 is. =P
To sum up my own point -- I'm pretty sure your concerns are based on incorrect assumptions about the nature of game development, and there's absolutely no reason why using UE4 would allow for a more ambitious story. I'm not even convinced that it'd significantly affect the amount of time the story staff had to work on the game.
*
Anyway, forgot to respond to this one before, so:
0.2 has this weird thing going on where it spams debris and vines and foliage everywhere to a much greater extent than last gen could have handled, with the ironic consequence that the screen ends up being filled with low-poly objects. And, because the objects themselves are both low-poly and have detail added with relatively low-res normal maps, the result is a last-gen feel (because last-gen
also used low-res normal maps everywhere to make up for a dearth of polygons, particularly in Unreal Engine 3 games =P ).
In other words, specific objects don't look
that much better than last-gen, even if there are many times more of them. It doesn't help that character models seem decidedly more limited than, say, Nathan Drake from Uncharted 3 or
Lara Croft in the X360 version of Rise of the Tomb Raider (both of whom have skin that doesn't look like plastic).
It's a particularly strange choice of direction for KH -- it's traditionally used flat shading (in-game) and/or made extensive use of areas of flat color (in CG) to mimic traditional animation, so increasing real geometric detail should have been top priority. I get that UE4 is likely to be much more efficient at faking detail using lighting tricks than at rendering tons of relatively simple polygons, but if that's the case, it's more a reason why UE4 is a poor fit for KH than an excuse for the current visual direction. =/
