It certainly would have been interesting to see but I can see why it was canceled because of lack of direction. IS has still never made a true 3D game, and the 3D graphics they use in even their most recent Fire Emblem are still kind of primitive compared to what Nintendo's other studio's are putting out. Their lack of 3D experience came back to bite them, which is why even something like #FE had to be outsourced to Atlus.
Of course I wouldn't be surprised if some of the idea's in this game might have made it into #FE. IS and Atlus talked about how it took awhile to decide on the look and gameplay of #FE, so it makes sense IS probably showed Atlus a lot of the stuff they had planned on this canceled Fire Emblem. And the direction IS wasn't able to figure out, Atlus filled in the blanks and the game is reborn.