Is there anyone out there with some facts about this mythical game? There has been several rumours, but the most firm one have been that Shiggsy started developing a 3D platform game with Mario on the SNES but found the hardware too restraining, moving to fully concentrate on "Project Reality". No photo whatsoever has been found. There has been rumoured links with SMRPG and the FX-chip, but nothing solid.
I definitely remeber hearing this on several occasions. The story seemed to be linked to that of starfox. However, I wouldn't look too much into it, as from what I could tell, it wasn't a game, it was only development. Meaning like the infamous SM64 2 and Mario 128 it probably only consisted of a simple tech demo. As miyamoto is infamous for making hundreds of "demos" before deciding. There's plenty of info about it in the Super mario 64 Wikipedia entry, as well as the sources to the interviews where miyamoto discusses it http://en.wikipedia.org/wiki/Super_Mario_64#Development
Mario 64 started as a SNES game prototype. Of course, the proto would not have been anything like the Nintendo64 game.
the story goes further back to the NES , with the test prototypes of the Mario Chip. Mario FX was nothing like SM64 from what I understand. The developers of mario64 were amazed of the new gameplay and seemless worlds they were able to create. Hence, mario FX would be more like Bug! in my opinion, or perhaps like Starfox 2's engine (but who'd want a mario looking like that?)
Mario chip was for snes, the nes 3d stuff was software according to jez san. http://www.armchairempire.com/Interviews/jez-san-interview.htm