Welllll, I know Japan team was saying that, but they had an agenda there, so hard to say. Also hard to say which OS was better at the time either, as that was argued as well. By all accounts Windows CE was the weakest of the bunch though. I'd imagine these days at least one of these devs are on Twitter by now and are probably not unwilling to explain the situation.
Windows CE was just an optional OS; if you wanted better performance out of DC you used Sega's own tools. Almost all of the Japanese teams did, to my knowledge, but there are exceptions like Sega Rally 2 (which I don't remember was handled by an internal team or outsourced to another studio).
It does matter and it wasn't like MK 3 sold millions on the PS, the move to full 3D fighters was happing and that's to overlook SEGA had far better ports of Street Fighter 2 games, KOF games, SS games, NightWarrior games Ect, not that helped. So this notion that an IP like EC was going to beat the likes of Street Fighter, never mind Tekken or VF seems very far fetched.
You still don't get it; this isn't about having EC "beat out" Tekken or VF (speaking of, at least in the West I bet a 3rd EC would've came within reach of VF's Saturn sales if not actually outsell it). It's about having a game that adds to your overall product catalogue in a more beneficial way, a more strategic way, therefore lifting up the value proposition of the console as a whole.
And for the West, a new EC made a hell of a lot more sense for Saturn than Sega pushing Virtua Fighter exclusively instead.
Project Justice, also known as Rival Schools 2, was released on the Dreamcast in the West (US and Europe).
Looks like you're right; thanks for the correction.