What else are they working on that is preventing them from working on Kingdom Hearts 3?

I'd say it's a bad move. Kingdom Hearts has had so many 'spinoffs' (I know they're important to the storyline and all, but they aren't a numbered entry) that they need to refocus everything that's happened since Kingdom Hearts II, and just consolidate the story.

The multiple games passed out since Kingdom Hearts II, I'm sure, are great (not that I can play most of them...) but seriously, Kingdom Hearts III just needs to be released as soon as it's polished up.