Aura24 recently got in contact with one of the writers and got this response:
Quote: Daniel Altiere
So sorry for the let down but we're as disappointed as you are. I'm afraid we're just the writers -- no more than hired hands. We didn't even know the project was cancelled until months after they pulled the plug.
Did you consider writing the gaming company? They're the ones who made the decision to go in a different direction. And if we knew what that direction was we'd share it with you. Again sorry for the disappointment. Wish we had more encouraging news for you.
With no news since May 2008, it was only to be expected. I've readded the full synopsis of the proposed movie back to the The Legend of Spyro 3D page in case you are interested in what might have been.