Seiken Densetsu 3 (Or Legend of Holy Sword 3), the sequel to the successful Secret of Mana, is probably one of the best RPGs never released in the US. Released in Japan by Square on September 30, 1995, it wasn't released in the United States for many rumored reasons, although some arise from confusion with the similar fate of Final Fantasy V.
Square of America was not, at the time, a large or rich company. Games like Final Fantasy III and Chrono Trigger were critical and popular successes, but due to the limited RPG market and the high cost of high-capacity cartridges, they were never finanacial successes. This limited SoA to one or two releases at a time, which wasn't usually a problem, given Square (of Japan)'s limited output. This would not have prevented the release of SD3, except that...
Square of America made a big gamble. Nobody, at the time, really knew how to make the kind of RPG that American gamers would want to buy. Attempts had been made, with varying amounts of success. Square of America, with several years of game localization experience under their belt, decided to create a game without many of the Japanese design, setting, and character tics, a game with a more American style. This left no resources to be translating anything else, but that was okay; the only games Square of Japan had coming up were a sequel to what was merely a cult classic in the US, and a collaboration with Nintendo (which was localized and published by Nintendo itself, and so was not SoA's concern.)
Unfortunately for Square of America, this ambitious project, Secret of Evermore, was an incredible flop. Not only was the gaming "mainstream" utterly uninterested in Secret of Evermore, the small core of RPG fans were at once annoyed at its lack of the Japanese game design tics and doubly annoyed by the fact that Evermore was apparently being offered in place of Secret of Mana 2/Seiken Densetsu 3.
This became something of a self-fulfilling prophecy. Secret of Evermore was a terrible seller partially because it wasn't Secret of Mana 2. Since Secret of Evermore flopped, Square of America had little money or desire to release a similar game. It was no help that Square of America was tied up working on Chrono Trigger, and by 1996, when Chrono Trigger was finished, the SNES was already on its deathbed.
These were the primary factors. It bears mentioning that, at the time, Square of America was unwilling to publish games with heavy religious overtones without first excising the religious references, owing to pressure from Nintendo and parents' groups. Also, Seiken Densetsu 3 was something of a poor seller in Japan, as compared to the success of Chrono Trigger.
Contrary to myth, neither Super Mario RPG nor Chrono Trigger played a direct role in the lack of a SD3 localization effort. While Nintendo, at the time, did occasionally shape game release decisions, Secret of Mana 2 could not have been released by the depleted post-Secret of Evermore Square of America. Moreover, Super Mario RPG was localized by Nintendo of America; Square of America had little to do with the localization.
Also contrary to myth, there was never a mostly-completed script for Secret of Mana 2. This persistant rumor probably owes to the proven existance of an 80%-complete script for Final Fantasy V, planned to be released in the US as Final Fantasy Extreme (named such because of the high difficulty), which was axed due to the high difficulty and the fact that it would have been in direct competition with Final Fantasy III. While there exists the possibility that some script was written and simply forgotten, the fact that all of Square of America's localization team can be accounted for as working on Secret of Evermore or Chrono Trigger makes this possibility very slim.
Seiken Densetsu 3 is the third game in the Seiken Densetsu, or "Legend of Holy/Sacred Sword," series, best known in the US as the "Secret of Mana" series. The series progression is...
Final Fantasy Adventure/Sword of Mana -> Secret of Mana -> Seiken Densetsu 3 -> Legend of Mana
The rumored Seiken Densetsu game under development at Brownie Brown is not a Seiken Densetsu 3 remake; little else is known about that project as of this noding. The project in question is a remake of Seiken Densetsu 1, originally released in the US as Final Fantasy Adventure. It will be released in December 2003 as Sword of Mana.
While there have been a number of English-translation patches for the Seiken Densetsu 3 ROM dump, there are currently no plans to bring SD3 to the US commercially.
Sources: Credits for Secret of Evermore and Chrono Trigger, mobygames.com, www.gamefaqs.com