It's important to distinguish that the PC engine isn't
being reworked, only
the console version. So the console rework will not slow down the PC development because there are two different teams working on either: the PC team doesn't work on the console version and vice versa. As for engine reworks always being a waste of time, I'd have to disagree with you: while engine reworks don't directly contribute anything to the game itself, their entire point is to save time in the long run, and enable future updates that otherwise would be impossible, or simply not feasible. In many cases, reworking the engine is worth it over continuing down a forsaken road (or simply quitting development altogether).
The reason why they didn't use the PC engine for consoles is because it literally could never work. The PC engine is written in XNA, a framework that was only supported by the XBox 360 (because both are created by Microsoft), and not by the Playstation 3 (because that's Sony's), or any other at the time conceivable non-Microsoft console (and eventually not even Microsoft consoles like the XBox One, since XNA was discontinued somewhere around 2013). Had the console version been written in XNA, it would only
have worked on Microsoft devices, and nowhere else, meaning that either PS3 would have to be left out, or that it would have gotten its own version, essentially doubling the required amount of work. So what the console developers did was write a custom engine (XNA isn't technically an engine, but for the purposes of this conversation, laissez-faire) that could be used across both consoles.
The problem, however, is that when that version was being worked on, PC Terraria was considered dead. The console versions were essentially Terraria as it existed at that point, plus some extra goodies (which is what this thread is all about). So not only is the current console version substantially different from (today's) PC engine because it has
to be (for not being able to use XNA), but also because it wasn't written to accommodate substantial future updates (which, to be fair, PC Terraria was not either, thus the titanic internal differences between 1.1, 1.2 and 1.3 Terraria). The 1.2 update on console still used the 1.1 engine, figuratively overloading it, like a laptop drawing a higher current from its adapter than the adapter is supposed to supply. Furthermore, they were running 1.2 Terraria, a contemporary game, on consoles that were at that time almost a decade old. And finally, while their custom engine worked on consoles, mobile devices were another breed of machine all together, requiring their own version yet again (a derivative of a derivative, if you will).
Right now, the game is being rewritten in Unity, which is a very good choice for cross-platform development (meaning that the same code base can be used for all devices). Not only that, the way it is written now allows it to accommodate for a wide variety of new content, allowing it not only to update faster, but also making it much more unlikely that adding something new (which is what Terraria 1.X updates just love
) will invalidate the entire thing (thereby reducing the amount of QA needed).
So yeah, it's not all doom and gloom. You may view it as a setback, but it's a necessary setback.