The Vita is currently the most powerful mobile device in terms of specs out there. With downscaled assets and enough time spent on optimization, it can probably run any engine intended to run on the PS3.

The bigger problem, at least IMO, is storage space. Even downscaled, XIV is going to take up a lot of space and requires a lot of drive activity. The Vita doesn't have accessible internal storage, and Sony is charging a premium for memory cards. Who would want to pay an additional 50+ bucks past the cost of the game itself so they can fit a mandatory XIV install?

They could make the game cart big enough to hold all eventual patches, but the cost would still be passed on to us consumers, and I just can't see it being a pretty outcome.