Oh, this wasn't "an internal team", it was HexaDrive working on this, who had previously remastered Zone of the Enders for Konami at this time (after another studio totally botched it and HexaDrive had to re-do all their work, which was then given to owners as a free update)"
https://twitter.com/manfightdragon/stat ... 7389221093
"My understanding was that Hexadrive was approached to port the series, and they pitched a SH2 remake to them instead. It does make me wonder what Bloober brought to the table that made Konami go forward with them for the concept."
https://twitter.com/PrCat88/status/1754359280629645385
You can check out the proof-of-concept video at the link of what Hexadrive was doing, taken from a recent interview from The Short Message:
https://youtu.be/3iLPupH_UNU
(Starts at 1:08)
Key points:
- Konami initially contacted Hexadrive about porting the SH series.
- Many at Hexadrive were big fans of the SH series
- They didn't mind doing ports, but began thinking remaking the series would be more ideal and liked the idea.
- They created a production-quality mock-up playable proof-of-concept demo using SH2.
- They then returned to Konami with that pitch instead of porting.
- Unfortunately Konami rejected it.
- Half a year later, Konami came back to them about making The Short Message.

I... think I actually would've preferred this more faithful-looking version!