The old school movement seems more open and inviting to other publishers but I don't know if it has the purchasing power to make such a venture worthwhile. Most of those on the small publishing side that I tend to read seem to indicate a rather smallish scale of things but I have no insider information on this. What was it.... Stonehell dungeon where the author was mentioning something like 500 units solid and I think that included PDF?
Pathfinder... I wouldn't qualify that as 'old school' as much as the d20 branch.
If 4e isn't cutting it and they suspect that Pathfinder would... then Pathfinder is the way to go. In addition, there would be less hassel in the transformation of product from 3.5 to old school 1st ed. Might make it a more viable method, espeically for convention materials.