Good luck to the guys. I released a similar app a few months ago - Beatwave (http://beatwave.co). We've just hit 1.2 million downloads so the download numbers they're after are fairy realistic I think. Just have to make sure the monetization is spot on to capitalize though!
All existing apps will be rendered into the current 320x568 frame buffer and scaled up. It's really no different to an iPhone app running on an iPad in that respect.
I'd imagine the scaled up apps will also look slightly blurry, but how much is to be seen once we get the devices.
A developer has to build the app under iOS 8 SDK with new launch images for the iPhone 6 and 6+ to use the native resolutions of those devices.
The frames will then be 375x667 and 414x736 for the iPhone 6 and iPhone 6+ respectively.
So the auto scaling is a stop gap, you really need to have the app running at the native resolutions to look as best they can.