I may have some of these "facts" crossed, but I believe members of the MML team (or maybe it was the creative director?) went on to create Dead Rising. I read an interview with DR's director on 1up a while back and he said his team was ready and willing to make MML3, but are just waiting for Capcom to give them the go-ahead. He didn't sound especially optimistic about the prospect, so I'm pretty sure that if it hasn't happened yet, it probably won't happen at all.
However, isn't Capcom releasing Mega Man Legends as a PSN download? Who knows, maybe it will perform well enough that they'll see that there is still an audience for the series.
Oh, and have you played The Misadventures of Tronne Bonne? It's a spin-off of a spin-off, but if you can track it down it's actually a pretty fun game (especially if you like the Servbots).
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