Yes and no. I mean it kinda fucks over Square-Enix since they get no actual money from the free version since Sony is literally comping the cost due to our PS+ memberships and allowing a free upgrade to the PS5 version with no actual sale having taken place would be Sony saying fuck you to it's biggest money making publisher/developer. I mean I'm pretty sure there's going to be a ton of people who download it without knowing this who are going to be up in arms but not much you can do about it unless Square gives the go ahead for it (which is surprising they don't but my eyes are clouded due to my love for the FFXIV dev team and how much they do for their players).
The other work around is to buy the physical version of the PS4 copy but that will still require you to have a disc version of the PS5 to even play the upgraded version.