So what do you want them to do GH? Abandon their inhouse engine and recreate from the ground up and pay licensing fees to a 3rd party? not to mention it would take years to convert their assets over to a new engine.

They will do much better implementing new and improved versions of crystal tools and updating the client if possible.

and to answer your question more directly,
No it's not their choice of engine that ended FFXIV in such a sad state. It was the production team, and lack of direction and proper system implementation.
They coded this version of crystal tools to their needs, and they can continue to change it. I hope we see improvements and optimizations to the code so it preforms better on lesser PCs. In the future I think we'll see more detailed animated environments.
I think the real question is what happened during production of this game?
there was 4-5 years of development, and it just doesn't show.
My money is on they abandoned a project 1/2 way through and started over to create FFXIV to- close to a deadline to really fully envision the game they wanted to create. I mean 4 years of dev time and you have closed "alpha" tests?
We've seen more changes in the past 5 months since Yoshi-P took over than we did from the 8 months alpha-Tanaka dismissal period.