I'd understand this choice if Paprika was wildly successful and/or had extra mainstream appeal. But I don't think it is.
And, out of all of Kon's films, Paprika is the least suited to live-action! ANY of his other films (Perfect Blue, Millennium Actress, Tokyo Godfathers) would have been a better choice!
Hopefully, this adaptation of Paprika falls into development hell and never sees the light of day.