It's actually better than some of the old K-Line stuff, other larger K-Line models are more like S-scale. I have the K-Line Allegheny, it's considerably smaller than my Lionel scale Allegheny locomotives.
The K-Line Allegheny is a scale model, but is 1:58, as I believe it says on the box. I do believe that the K-line (now WBB) USRA Pacific (and there was a K-Line Mike version) was built to the same 1:58 scale (it's a good model) rather than to 1:48 O-scale.
So - the new WBB die-cast Pacific is a nice scale model; it's just not O-scale, even though it's O-gauge.
I always though that 1:58 (actually 1:56 would be right on) would be the perfect scale/gauge. It would have a gauge of 1". It would be more room-friendly and less unwieldy than O, but more impressive than 1:64 S-scale, and track well. It would have required a new track system (NOT a 3-rail one) of 1", as mentioned. Kadee couplers. Sweet. I would have called in "SO" scale - between S and O.
But no one is ever going to offer a new model RR'ing format again. Ever.