From what I've read, it does seem kinda feasable.
What they appear to be doing is making a cheap n cheerful 'bitza' out of previous generation drivetrains, suspension etc. In this way, the R&D has already been done, and the costs thereof have already been absorbed by sales of the vehicle they were originally developed for. The only tricky parts are the RWD 'box and possibly diff, but if a suitable toyota 'box can't be used, they may just come from subaru or diahatsu, with a bellhousing made to suit the 2NZ.
I've heard tell that the rwd floorpan is in fact a cut-down and lightened version of the IS200/Altezza pan... which would explain the short overhangs and cab-forward design. Hopefully it will share the suspension components as well.
Two things to bear in mind though.
Yes, its an Echo motor. Not exactly happy-in-your-pants material, but they're a tried and tested and generally unf@$kable motor. Plus, 88kw in a 1000kg rwd is still going to be a buttload more fun than the equivalent fwd dreck getting around... Bigger would be better of course... but its all speculation and conjecture at the moment so I guess we'll see.
Also, given Toyota's history of not releasing the fun stuff in AU for fear of undercutting sales of their own bread-n-butter beigemobiles, its unlikely we'll even see them in aussie showrooms. Which is bad, and yet good.
Bad, because we'll have to wait a couple of years for them to become eligible for import under SEVS.
Good, because they'll be CHEAP... and cheap purchase price means more money left over for engine conversions... :o
We'll see...