This is a sad day for games in general. The Red Engine had such good physics, the engine was quite easy to understand and mod for... And for CDProjectRed to partner with Epic, well... the less said the better.
Witcher 4 will probably have the fewest mods of any title in the franchise.
Mod-wise, I agree. I also like independent efforts, it shields them of other's bad decisions, and gives them the freedom to take any direction they want.
However, the techs teased by UE5 are way too good to turn a blind eye to. Developing those in-house would probably be too expensive, and by looking at how hard it was to make new stuff for Cyberpunk 2077 (I mean features they never had to do, like car physics, crowds, police, things that the Witcher series didn't have), I kind of get why they considered the change.
Here's hoping they can keep their principles and modding support even with the new tools.