Apple spent a lot of effort adapting or creating languages, starting with Clascal/Object Pascal (or Woz' SWEET16 as an alternative high-level assembler-like intermediate language and 16-bit virtual machine) over Objective C (bought from Brad Cox and Tom Love and significantly extended/changed over the years) to Swift. They also used these languages to implement critical parts of the system software, e.g. for the Lisa or the NeXTstep ObjC-based driver framework.

So this speculation has quite some credibility - but, as the author states, I think this is still in an early stage and will take quite some time to become mature.

There are other people designing their own system-level language and OS, e.g. Drew DeVaults Hare and the Helios microkernel and Bunnix Unix clone based on Hare - this is a single person effort, so given Apple's resources, this is definitely feasible.

The rewriting: quite believable, but it will take a looooooooooooooong time, and their goals may change looooong before they get there.

It not being Swift: unlikely, IMO. They’re spending lots of resources on Swift-C++ interoperability, added lots of low-level stuff to Swift, and advertise Swift for embedded use on Swift.org,

I don’t see what another language could bring. I also do not see them rename embedded Swift to something else; it’s hard enough for them to make Swift get traction outside their ecosystem already.

Also note that the “New Apple Language (hypothetical)” sample already is valid Swift code.