A screen is placed at the film place and a relay lens is used to capture the image.
Yes, this is basically what they are doing. I suspect that most of the backers won't understand this and will be disappointed with final results, but the makers are not hiding this fact, so...? They DID mention the grainy appearance due to the screen, as well as some vignetting.
I don't think it's vapor as they seem to have done a previous project producing prototypes.
If you want to get a sense of what the quality might be like, try this: set a 35mm film camera on a tripod, and focus it on a scene. Then put a high-quality cellphone camera up to the eyepiece and snap a photo. I'd guess this will give you about 1/2 to 2/3 of their final quality if you can ignore your ground-glass markings. This is essentially what they are doing, except that they selected a special focusing screen, and they are not going through the viewfinder optics.