Just found out a way my self, dont know if you found out already, but in case some one is looking in the future.
It is pretty simple, like in the video posted, you only have to multiply the texture for the vertex color node and set the material shader model to unlit, unless you want the model to also cast shadows or receive lighting, then you would leave it in default lit. And if you want a full PSX look set metallic specular and roughness to 0
As an example i imported to UE a room from vagrant story and redid the lighting with vector color.
