Keiji Inafune's very public departure from Capcom spoke volumes about the state of development in the Japanese gaming industry. It certainly didn't help that Inafune was exceptionally vocal about the issues he had with the suits at Capcom. That's why we're not all that surprised that Capcom wasn't keen on keeping Inafune around for Mega Man Legends 3 and other Blue Bomber projects the publisher had in the works.
Speaking with Joystiq, Inafune said:
I really wanted to finish those two projects, especially Legends. It's really up to Capcom to let me do it or not, and for the moment I don't think they're gonna let me do it.
Regardless, it seems Capcom wasn't interested in making more Mega Man games at the time anyway. Inafune continued:
The two projects were really hard to even get started, because the title is kind of old. We were bringing it back. It wasn't easy for me to get the go ahead from the company, I was fighting against the company, and now it's been canceled.
It's sad to see Mega Man go by the wayside, but when the creator of the character leaves so publicly, I can't imagine many executives would consider pouring money into a project they never wanted to start in the first place.