Again, if these rumors are true, it reminds me very much of Bioshock Infinite. Infinite was in development for about five years as well and the first gameplay demo it released was created just for the sake of marketing. It wasn't playable and wasn't part of the final game. However, many of its elements did end up making it into the final game and the final game ended up being good.
If the game was going to be canceled, I don't think Square would have bothered with announcing the game again and accepting pre-orders for it.