Near as I can tell, this was a result of Nintendo being unsatisfied with the way the game released in Japan (broken) and asking Tecmo to fix it for release in other regions. Release in America and Europe was planned, contingent on the game being fixed, but that never materialized.
Why? From what I have been told, Tecmo wasn't keen on doing it. They thought the game shipped fine, at least as far as controls were concerned, and they were preparing a large workload and a merger at the time. If Nintendo had paid them extra for what they considered extra work, they would have been fine with it. Instead, it all came from the initial budget Nintendo had for development. In other words, no one was going to give Tecmo extra money for work on the localizations, so they weren't going to do it.
I guess it comes down to whether or not Nintendo was okay with shipping the game as it was, which apparently they weren't. This is one of the situations where NCL did have a direct influence over the other companies with regard to localization. They basically said it wasn't going to be released in other countries in the state it was in and considered the Japanese release kind of an embarrassment.
Tecmo, for their part, seems kind of bitter about the whole thing. Just guesswork, but I think they feel they've been snubbed by promises of a better working relationship and lots of money from a very rich Nintendo. When Tecmo said it was in Nintendo's hands whether the game was coming here, they meant that if Nintendo insists on not giving them extra money or still being concerned about the state of the game, then nothing will happen.
