Rare could never solve all of the obstacles
Word is now that Rare (on several occasions) was working toward getting Killer Instinct HD greenlighted, according to former Rare artist, Lee Musgrave. This confirms rumors that have pegged the title as something Rare was looking to make happen for a long time.
Musgrave says that a number of licensing obstacles and a lack of interest contributed to the title’s failure to get the green light. With the recent renewal of the Killer Instinct trademark by Microsoft, rumors of a possible revival are once again making the rounds.
However, from what we have been able to determine, it isn’t in the cards right now. Perhaps in the future, for the next console, it might have more interest to finally make it happen.
One thing is for certain though - there seems to be more interest in it now than there has ever been.