Grin (who developed the recent Bionic Commando and Terminator games--not something that would cross the attention streams of your average FF fan) apparently had the game for about 6 months before Square-Enix took it back from them. Squenix was concerned about the quality, and for good reason--the Grin games I mentioned were not very good.

Rumours say the project is still being developed somewhere, despite Yoichi Wada saying in a recent interview that they have 'no plans' yet to develop FF games outside of Japan.

The combat really looked like Demon's Souls.