Not to fear, the project isn't canceled. Hopefully.
http://www.nintendoworldreport.com/news/25987
In wake of the recent natural disasters in Japan, the Mega Man Legends 3 Project was feared by many to be delayed, or even canceled.
In a recent blog post, however, producer Tatsuya Kitabayashi stated that the game has been given the green light and production has restarted. He posted up a group image of the cast supporting the quake recovery, signed with the Japanese title as "From the Rockman Dash 3 Project Staff".
A public demonstration had been planned for the end of March in Akihabara, Tokyo. However, it was canceled due to the quake.