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How screwed am I?
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There there. Rewriting from scratch never go smooth. You at least have 3 years I'd say.
Yeah. Everything depends on the complexity of the product, but it's just as likely that it's the new CTO and his team that gets canned when they get bogged down in the details and the costs start racking up.
Startups inside companies usually get shut down once the bill gets too high. I've experienced this first hand
This may be the case. They've gone from "this should be easy" to "oh, we never thought about that" pretty quickly.
That screams inexperience in their end, to me. 20 years in the field, I learned to respect legacy. Can't move away from it without getting it under control first and then weeding out the smelly parts.
The biggest problem with that approach is your team loses their roadmap, funding for new initiatives, and ambition while that's happening. Your sprint backlog has nothing but minor tech deficit tickets in it, and overall it becomes a chore to get anything done.