Personally I think it's a great step from ARMA 3. I, and most of the people I've talked to, tend to get intimidated by the complexity of ARMA and all its controls, but I tried to breach the barrier and never quite managed to do it. When this came up, I tried it and immediately loved it. Hardcore fans of ARMA will hate me for this, but I think the move in a slightly more casual direction is going to get more people interested and might even get some movement over to ARMA if people feel like they want a little more complexity.
It does have problems with overall smoothness, but it's a prototype that can change to account for that. I love the fact that it still retains a decent amount of ARMA's qualities, like the importance of team tactics over running around by yourself and careful positioning rather than spray-and-pray approaches, but still integrates the mechanics of by-the-book FPS games, like a standard run button and somewhat less complex weapon mechanics. Having the weapons auto-zoom when ADS is applied means leaving space for a medium-to-long range contact which people would do in real combat, forcing me to think more about positioning and pulling back if the fight isn't going my way. I've been looking for something that fits right in between the simplicity of CoD and Battlefield and the complexity of ARMA and this is exactly that. Keep a firm focus on medium-level usability and team tactics and I think it'll go far.
Also if you're thinking about making it paid, maybe give people that played the prototype for a certain amount of time a copy because I am an excessively broke college student who can't even afford the Apex DLC for ARMA 3 to play all the DayZ mods. I'd love to keep playing Project Argo once it gets farther, more maps will definitely make me come back for more.