SCU is set in an alternate reality, where Kerrigan is unable to stop the hybrid's assault, leaving the Protoss defeated. It's all being done with Blizzard's "blessing/permission" as well.
The team is seeking funds because they have been developing the game "for over two years with no funding whatsoever." According to their Kickstarter (via Massively), funds will help the team "have the time, motivation, and resources we need to put that fresh looking AAA polish on SCU and get it out to you faster, better, and sexier."
Perhaps the best thing about this Kickstarter plea is that Upheaval already has a working prototype for everyone to try. If you have StarCraft 2 installed, you can try it out here. Here's a gameplay video as well:
The team is currently seeking $80,000, of which it has already raised $11,000. Should the project succeed, the plan is to release StarCraft Universe as a series of downlaodable games over Battle.net that are free to play with the Starter Edition of StarCraft 2. The first chapter will be an "open beta," while additional campaign missions will be released as episodic content "once we feel that all of the game elements are stable."
Shacknews' crowdfunding policy requires games to have a prototype for front-page coverage.