Indeed. We talked about it. He plans on using the official Katana SDK too. I hope to talk him out of it. Seems like a complete PITA.
We don't have sophisticated 3D stuff in KOS, so I understand why some devs just go the Katana route for a quick port, but for 2D+audio+input I don't really get it.
He seems to be very concerned about being "authentic" and creating games exactly like back then, including the development environment?
As for the 68k asm: there might still be an option to have the game code itself run via one of the many 68k emulators for Dreamcast while porting the VDP code to run natively.
I actually saw later in the FAQ that he does not want to use an emulator and intends to port all assembly code.
He can't possibly be doing this for performance reasons, otherwise only parts of his code would be assembly (like the renderer) and it would be easier to port.
It also can't be for authenticity, because even back then programming was done in assembly + c/c++.
If I am to invest money into this project, I'd rather he works on something more meaningful than setting the remaining lives value in various assembly languages instead of C, to be honest.