Given Fuchsia core design, i think they will probably target this space with it, and use the "Android layer" for more powerful phones.
I would bet they will migrate Android to run inside ChromiumOS, and make a flavor of Chromium running on Linux and other running on Zircon.
For feature phones they would use the zircon+chromium+webish-dart-framework variation and the linux+chromium+android on powerful phone, until Zircon is mature enough to replace Linux in all fronts.
At least its what i would do if i were them, and its how i project their future steps in this domain space.
So the KaiOS would be competing with the Zircon+Flutter variation, and i guess they are just betting in another horse to make their chances even better to be dominant also in feature phones.
Pretty smart move, given they have a lot of cash to spare.