Nintendo Life forum member slapshot82 recently wrote a letter to US publisher XSEED Games asking if the company would relent on its non-committal stance regarding the North American localization of Retro Game Challenge 2.
Sadly, the reply was less than positive:
Thanks for the kind words, but afraid it's not by choice on us not bringing over Retro Game Challenge 2 at this point when we're certain to lose money on it.
No company can continue to exist if they take on projects they know they're going to lose money on, so as much as all of us here love the series and would like nothing more than to work on the sequel, afraid it's not going to happen anytime soon.
It would seem that XSEED lost quite a bit of money on the original Retro Game Challenge, which is a shame because it's an excellent game.