SEGA wont cancel it.
I have only ever known SEGA to send one C&D letter for any fan game and that was Beats of Rage. (The company were trying to make money off of the fan game that was using SEGA's own code and assets.)
But if you look at fan games like Sonic Before the Sequal... and a million other SEGA fangames. SEGA have grounds to take those games down, but never have. And there are some really quality fan games.
If I recall correctly Sega issued a C&D to the Bomber Games crew for the Streets of Rage Remake which was 100% original code. Although they did use retouched versions of the original sprites. In that case though, the IP was clearly in Sega's hands, which I'm not sure is the case here. Also, Bomber never publicized the way this WB3 remake is publicizing, which would leave me to believe Sega would have already shut it down before getting to this point.
Sega is pretty good at handling these things though. Even with the Streets of Rage Remake block, they did it just after release, ensuring all those who were following the project closely to already download it and distribute it privately. Everybody wins. Sega protects their IP, Bomber Games solidify their Fan-Dev status, gamers following the project get to enjoy the game.
I would imagine with Lizard Cube putting out trailers, they've squared away any licensing roadblocks.
Chances are, Sega just doesn't have the rights to this one WonderBoy game. Even in its day, it was released on other platforms. Very very curious.
