More about this and the 3D backgrounds from the thread I linked to:
To say that Virtua Fighter 3 never existed on the Saturn is ridiculous, as this game was actually completed not once but twice, each time being cancelled due to Sega's foolish managerial decisions of the post-Saturn/pre-Dreamcast era. AM2 delivered the first master of Saturn VF3 for approval in July 1998, only to be turned away because Sega was now focusing on the Dreamcast and wasn't prepared to release a downscaled conversion for older hardware that may affect sales of the planned upcoming 128-bit edition.
Yu Suzuki decided that Saturn owners had wanted a technical showcase like VF3 more than anything, plus he was tired of hearing about PlayStation's superior graphics and didn't really want to work on a two-year-old game for a system as powerful as the Dreamcast (originally, his intention was to hold VF4 for that platform, but it ended up being so good not even this system could manage a port). So, instead of doing the obvious thing and handling the Dreamcast version in-house, AM2 gave full assistance to Genki while it carried on producing what promised to be the last great Saturn game - well, apart from perhaps the Shenmue prototype, which was in development simultaneously!
After just a few weeks of hard programming work, AM2 managed to bring back fully polygonal backgrounds and push character detail to near Model 3 levels of quality. Low detailed polygonal models were utilised for the actual fights (or when two characters were seen on screen at once), and during the winning sequences a higher quality alternative would be streamed into memory, hidden by the replays.
For those more technically minded, the first version of Saturn VF3 pushed 500,000 polygons at 30 frames per second, lacking much of the background detail that made the arcade original so groundbreaking for its time. If anything, this build might have resembled the VF3 desert stage as it appeared in the earlier Fighters Megamix. As for the second revision, with clever use of the Saturn's audio processor for geometry (it is presumed that sound was either streamed or passed onto another of the console's many internal chips) this version reached 750,000 polygons at the same frame rate. Both ran in the standard 320x224 resolution, and nobody has ever found out whether or not the motion blur or stage fade effects were "real" transparencies or the usual dithered nonsense third party developers favoured. However, this being a highly anticipated AM2 production, I doubt Yu Suzuki would have allowed anything but the best. Also, coming after the likes of Burning Rangers and Panzer Dragoon Saga programmers knew how to better exploit this feature in the Saturn.
Anyway, back to the story...
A master for the second revision of Saturn Virtua Fighter 3 - this was the name given by AM2 to differentiate from Genki's conversion for the Dreamcast - was sent to a pressing plant in Japan in preparation for the game's release on 5th September 1998, but at the very last minute this was delayed until after VF3tb had become a launch title on Sega's newest console. The actual date Saturn VF3 was cancelled is documented as September 17, and according to Suzuki himself AM2 spent that brief period between its planned street date and ultimate rejection showing their work to various people - including some journalists backstage at trade events - because they knew it would never see the light of day through official channels.
Now, only the few who saw VF3 "in the flesh" are prepared to speak about this holy grail. While footage of the Shenmue prototype has been happily shared by AM2 (even though most didn't know of this game's existence back then), both masters of VF3 remain locked away. When questioned about the subject for an interview a few years ago, Suzuki asked that any discussion of Saturn VF3 be removed from the published article. Since then, nobody has ever dared to ask his views, although it is well known that he felt burned when Sega chose to promote Genki's flawed Dreamcast work over his own team's incredible Saturn efforts.
While not arcade perfect on a purely technical level, I strongly agree with Yu that most people would have preferred to see VF3 as one last brilliant farewell to the 32-bit age as opposed to being a poor launch title compromised by a limited development schedule and early programming tools. Besides, in the right hands (AM2, anyone?) the Dreamcast could easily have done a game like VF3 with plenty of power to spare. Thanks to Genki's lack of experience and the similarly poor conversion of Sega Rally 2, even at an early point in its life there was a doubt as to whether the Dreamcast had the power to manage decent Model 3 quality visuals. Fortunately, this issue didn't last as the first wave of stunning NAOMI ports was just around the corner (not to mention Soul Calibur, which looks amazing even today). As with the Shenmue prototype, neither revision of Saturn VF3 used any kind of hardware accelerator or memory upgrade cartridge, and I'm sure the ability to see games of this quality running on stock hardware would surely have silenced even the Saturn's toughest critic - or the most hardcore of Sony fanboy, for that matter!
I know that I've ranted on for more than long enough already, but just very quickly I would like to comment on something that Yakumo said in his last message. First of all, through my own research I discovered that the VF3 footage shown by Sega Europe was actually from the arcade version, and more recently I found the very same video with its original descriptive text, highlighting the Model 3 board's graphical capabilities. Along with the CG sequences for VF3, this was created way back in 1996 by a company known as buildup to promote AM2's latest game for its debut as a Model 3 tech demo. If you look carefully you will see that the solo movement showcases Yakumo described (and as seen in the "History" section of VF3tb) lack any texturing on the characters' skin, which is a specific feature described in several reports from the period.
One thing I've not been able to find out much information about is the existence of a genuine Saturn tech demo showing Aoi practice over a plain background, although I'm certain this was shown as there are far too many accounts for this to be a hoax. I did manage to find out that Saturn VF3 "R2" was playtested behind closed doors at the ECTS and Tokyo Game Show in 1998, although in both cases those attending have either refused to comment or highlighted the non-disclosure agreements signed for AM2 to protect its highly secretive killer app just in case Sega changed its mind and planned a release after all. Through hard work, I managed to find out that at least three staff from the UK official Sega Saturn Magazine - including the editor, his deputy and Japanese correspondent - have all seen and possibly played Saturn VF3, but once again they are all bound by gagging orders.
For one very last quick point, there were several dates posted on the SOJ website for the release of Saturn VF3, including a brief mention of 5th May 1998 - ironically the same day that Sonic The Fighters was due to appear in stores! Much like VF3, this one was completed and then laid to eternal rest due to a certain high ranking member of Sega's US operations feeling the company mascot wouldn't suit a fighter, even though Mr. Stolar had no objections to the game's arcade release earlier... did I just name somebody by accident?!