They've already confirmed that this is a new game, not a continuation of RS3. New world, different gameplay (WASD movement instead of clicking), different everything.

This is also not their first Unreal game, as they just released the 1.0 version of RuneScape Dragonwilds, their survival-crafting multiplayer game that has been both a critical and commercial success. It appears that RS4 is to some extent an expansion of Dragonwilds into a proper MMO.

Besides, if they're going to create a brand new big-budget MMO, what else other than Unreal could they realistically use? Graphics aren't the primary reason to replace the RS engine with Unreal - the reason is gameplay.

Their internal engine that they use for RS3 (and OSRS) is only suitable for games like current RS. Even RS3 is still fundamentally based on a 1 square meter grid, gameplay-wise 3D is an illusion (no jumping, climbing or flying), and most importantly game logic updates only once every 600ms, which is about one tenth of even World of Warcraft. They've made two pretty good games despite those limitations throughout the decades, but it can't scale to anything that feels more "modern".

> gameplay-wise 3D is an illusion (no jumping, climbing or flying)

3D is an illusion in this sense in every game, with the potential exception of space combat simulators. And they can only make it work by pretending inertia doesn't exist.

You can fly in World of Warcraft, but all of the content is on the ground, and the designers keep griping about how they don't want you to fly because it makes them feel bad when you skip their content.

You can jump in Quake. You can't jump in Doom. This makes no difference. Level layout is the same. Jumping gives you the ability to cross very small walls and/or gaps, which Doom handles by simply not placing things to jump over in its levels. Elevation is real in both games; you can always walk up a ramp. There are three dimensions whether you can jump or not.