Let's face it the game was crap that why it was canned. After 2 years on endless systems, hardly anything of a game was finished or why you had a level playable from start to finish and needed to look out to the NiGHTS engine (not that would have made much difference to the gameplay IMO).
I really don't get why the need to go for the NIGHT's engine you had the latest SGL system from SEGA and actually the boss engine IMO looked more impressive than NIGHTS even the VDP II sections looked better with some nice reflections.
The game wasn't really a game, nothing outside of camera, basic collision detection, and some controller polling stuff was done, so who knows how it'd really play. The version we got our hands on isn't the latest version ever made -- ours doesn't have the ability to create dynamic paths like some of the ancient videos Ofer posted does, but it's still pretty close to the last build. For the things it does, it does them adequately, like the camera is cool and snappy. The collision detection is a huge mess, and obviously no level layouts ever were made.
But all this stems from the project being rebooted twice. It's kind of hard to make progress, when you have to throw everything out and start from scratch a couple of times.
Also, regarding NiGHTS, the thing they showed off had sloping hills, deforming terrain, etc. All that stuff is much more well fitting for a Sonic game than the showy-but-not-fun stuff they showed off in the Sonic Xtreme builds that we released IMO. The NiGHTS engine at least could display very complex, large pieces of level geometry (loaded in chunks mind you, but still).
I very much doubt Sonic Xtreme, down the path it was heading, would have ever turned into a good game even with all the time in the world. But I blame the path it was heading down on head people at Sega making some really dumb calls. Like, seriously, it was supposed to have been a flagship title for the Saturn, they should have allowed the developers whatever resources they wanted to make such a game.
EDIT: Also, working your main
and ONLY programmer nearly to death is some awful, awful project management lol.