So why would an unrelated third party pitch a development plan to Paradox when a game was still in active development at a Paradox subsidiary?
The story makes no sense unless Paradox asked them.
It was public knowledge that they had fired Mitsoda and Cluney, hired an Ubisoft hatchet man to try to get it done, and delayed release yet again. Sumo swooping in with "Hey if this doesn't work out, this studio of ours can do it." Wester said that Paradox was ready to cancel the entire venture and just focus forevermore on strategy games until they got the pitch.
Sure they may well have heard solid rumors, but to make a proper pitch you need to know what is required. It's a project like any project.
Unless Sumo were prepared to finance the development themselves as some kind of a prestige project and eat any loss, they'd need a pretty specific list of requirements from Paradox.
It may not have been as straightforward as just Sumo taking a stab in the dark looking for more work to turn The Chinese Room into their sort of premiere game development studio. Paradox has had to have worked with Tencent to some capacity thus leading to Sumo, who are also owned by Tencent. Tencent was at least a 10% owner in Paradox at some point during the Hardsuit Labs development years and Paradox worked with Sharkmob, another Tencent-owned studio, on Bloodhunt.
Perhaps Tencent assisted with getting Sumo/The Chinese Room the project on Bloodlines 2 to some capacity. Someone at Sharkmob said that they wanted their Battle-Royale Bloodhunt game to follow Bloodlines 2.
That being said, Brian Mitsoda did say in a Noclip documentary on YouTube they worked on a Bloodlines 2 pitch for months as a stab in the dark even knowing all that work they were doing could only be pitched to Paradox, a company that rejects the vast majority of pitches it gets. They acknowledged it was a stupid thing to do and in the end, I guess they were right.