http://kotaku.com/the-real-story-behind-xenogears-unfinished-disc-2-1796151112

"As far as I can tell, however, there’s been no official explanation since Xenogears was released 19 years ago. So while interviewing Takahashi during E3 in Los Angeles today about his new game, Xenoblade Chronicles 2 (more on that soon), I had to slip in a question about that urban legend. Xenogears is one of my favorite games, I said, but what happened to that second disc?"

"“Honestly speaking, what had happened is Xenogears as a project was staffed pretty much entirely out of new staff members, young staff members,” said Takahashi, speaking through a translator. “Back then, we had the direction of, ‘All projects take two years and that’s when we need to get it done.’ So on top of developing the game, we had to nurture and teach and grow these younger employees. Things like 3D were extremely new, which led to some delays in the schedule. It just wasn’t possible to get everything done.”"

As it became clear that Takahashi and team weren’t going to hit their deadlines, Square’s higher-ups suggested that they just end the game after the first disc, when Fei and his team escape from Solaris.

"“It was a rough way to end it, and I felt like if we do that, then the players will not be satisfied,” Takahashi told me. “So we had a proposal—I proposed that if we do disc 2 in this way that it turned out to be, we can finish the game with the current number of staff and the current time allotted for the schedule and the remaining budget we have.”"

Very interesting! Too bad Square was so strict on release times back then, but maybe they should borrow a more lenient version of that policy today. 

I still think the game was fine the way it was. The second disc gave a post crisis, dramatic view of events wich fit quite well.

Would i like a remake to review that? Sure. But i still think it's the best game ever made.

I agree. I played the game well after it was released, and was warned about the second disc, but I didn't think it was that bad. Sure I would have rather played the events told, and it would've made the game even more of a masterpiece, but I like what was there, and having the second disc is preferable to having no second disc (as Square wanted to do.) 

Hopefully one day we will get a fully fleshed out remake, and I'd prefer Takahashi worked on it, but I understand why he might not as Square-Enix owns the IP and Nintendo owns Monolith Soft which Takahashi is invested in. Plus he is preoccupied with probably two Xenoblade series. 

Same.

It's an excellent game from front to back and if we never ever know what shoulda been... Who cares. It's more than fine the way it is.  

favorite rpg ever

Don't they will ever touch that game again. Same with Saga, too many hands that would make Nintendo just go, nah just work on new title. 

I remember it well. It was a for-real WTF? moment. It felt like it was going to turn into an interesting Alliance/Empire type situation and then, bam, off to an ending sequence. It was disappointing and confusing.

Not the only problem that game had by any means (I will never forget or forgive that terrible platforming sequence where you could barely see your mecha) but that was a real dagger.

I like Xenogears but it's story was really bloated and dumb.

Story & characters is the only thing the game had going for it IMO. Gameplay was boring & slow.

For the time, the battle system was actually more active than most turn-based Role-Playing games, depending on which characters you chose for your party. My only complaint about the gameplay is the random encounter rate and the irritating platforming, but I played the game for the first time in 2010. So it might have not been a problem in 1998.