In theory, I doubt development would continue. For a federated cohost to survive long term, it would also need to be open source, with a developer community that could fork the project and carry the torch. That's a very different cohost we're envisioning, even excluding required UX changes to make it possible.
At that point, one might as well imagine a cohost that explored better ways to make money, or attracted more users, or ran a tighter ship. Both scenarios lead to this discussion never happening.
Yet, Bluesky didn't even support video posts until two weeks ago. Many other highly requested features are still missing. To what extent does the success of each platform come down to money? What did Bluesky do with a larger budget to get an edge?