Yeah, the plan is for Episode 5 to be implemented in the Unity engine. Episodes 1-4 are using a modified version of the now retired Torque Game Engine (TGE) 1.4, which was released way back in 2005.
For more info about features, you can go to http://unity3d.com/
and learn more. You can also download the free version of it and try it out for yourself to get a hands-on feeling for what it has to offer. I think the most noticeable difference will be better-looking graphics, with improved lighting and special effects. At a later time we will be able to go into more technical detail and show you what it will look like.
Episodes 1-4 takes place mainly on the Land of the Green Isles and are highly interconnected, revisiting the same scenes over and over. Episode 5 takes the story to new locations and this makes it technically a lot easier to switch engines. The upgrade is highly overdue and a necessary step for us to take it to the next level with commercial games, but it has not been possible to do so until now without further delaying the releases of TSL episodes.
I wouldn't call Episode 5 just a prototype for Cognition, we are developing both games using the same set of tools and I think they will benefit from each other. While the two will certainly look very different on the surface, beneath the hood there are many things that will be the same. Our new engine is much more versatile and will greatly improve our development pipeline, while allowing us to try out completely new gameplay elements. With each new episode of TSL there have been significant steps of technical improvements, but with episode 5 and Cognition you will see the greatest leap forward yet, and I think it's going to be very exciting!