Wow. Pencil Royale, originally an April Fool's joke by visual novel maker Production Pencil, is actually being made. Confirmed at Pencil Live 2010, they're hoping to have it ready by Summer Comiket.

The April Fool's Trailer

It has 3D characters fighting on a 2D background, and there are some different costumes for each fighter. Has some sort of outfit damage system too, (reminiscent of Soul Calibur PSP?) Also, the game is voiced! The heroines themselves are drawn from various Pencil brand games, including Twinkle Crusaders, the Prism series, and Princess Witches. It was mentioned that there would be at least 4 playable characters, but the final number is anyone's guess. Production values seem half-decent, and it looks to play fairly well. Can't wait to try it out!