I've had my eye on VS story for a couple years and only recently caved at the start of the year to finally dive in, so I know I don't understand the full scope of changes/progress over the years. That said, I'm not really a fan of the idea of immediately branching into a side project this way, though I'm not against the idea of additional projects being worked on. From my limited perspective, this feels like a rush decision to seize on the vacuum create by Hytale's shutdown, unless the concept for this game/mode had already been tossed around behind the scenes prior to recent events. No idea what goes on behind the scenes, but maybe put any new team members to the test working on VS first, see how they fair with the engine and working with the rest of the team, then formulate a plan on branching into separate projects? You're the boss though and you have a better pulse on how everything works, so I'll simply trust whatever you decide will hopefully work out long-term.
Something else to note in your updated response to community feedback, it's reasonable for us to be concerned that a secondary project, built in tandem with VS, could end up with unintended feature creep or shift in mechanics in ways that change the feel of the game. I know you have zero intention of that happening, but I have seen multiple games over the years that drastic changed under similar circumstances, either subtly or suddenly. Again, I will trust your judgement and hopefully that won't happen, especially since that even though big updates are relatively spread out, all of them are focused on further flushing out the core survival experience with sprinkling of story progress; I'll have no issue so long as that doesn't change. I appreciate that you're open and communicative, even taking in criticism and publicly discussing your thought process.