I was wondering when that question would crop up. As far as I am concerned, the question whether Living Enworld updates to 4E or remains 3.5 should, and probably will be, a community decision, when the time comes for that.
My own personal opinion? LEW should stay at 3.5. Conversions between editions is always messy. Time-consuming. Tough, when you don't have quite a handle of the new rules yet. I mean, 3.0 to 3.5 was messy as well! WotC themselves suggest that campaigns should not attempt to convert to the new edition (and of course they'd want you to start new campaigns with the new rules). There are indications that gnomes and/or half-orcs will be dropped from the core books (to be reintroduced later in the year), and a few classes will get the axe as well. Add to that that LEW has quite some custom rules, and we would have a ton of conversion work (and we'd need to hope we can get a grasp of any possible balance problems!).
Under no circumstances should Living Enworld mix 3.5 and 4E characters. It's one, or the other. If the community decides to move forward, I'd propose a lull of adventures and temporarily locking the (old) character thread, so that no one is on adventure for a time, allowing for a period in which everyone can help with the update process, so it can go smoothly and without distractions from eevnts in adventures, characters levelling, and so on.