Hi, guys. I recently found out about Crimson Echoes and learned about the cease and desist letter that you guys received. I think you guys should continue on with the project. And finish it because it definitely falls under the fair use exceptions
https://www.ogcsolutions.com/is-fan-art-copyright-infringement/For fan art to fall under the fair use exception, it must meet all four of the following criteria:
It must be transformative, meaning it adds something new and different to the original work.
It can’t be used for commercial purposes.
It must not negatively impact the market for the original work.
And finally, it must be created for a limited and non-exclusive audience.
Crimson echoes checks all four of these boxes. You guys are definitely adding something transformative, because this is a whole new story. You guys are not profiting from it or selling it in any way. Square won't be able to show that this rom hack impacts their sales, if anything they will probably find that it helps it. And finally, this rom hack is definitely intended for a niche audience.
I understand that there was initial uncertainty, when you guys got the letter a few years back, but I encourage you to finish the work you started. Square, of course would send a letter, but just because someone says something doesn't mean it will actually be enforceable. Any legal department would CYA, and sent out these letters just in case they actually care in the future. But you guys would one hundred percent be fine if you finish the work.
EDIT: Flames of Eternity has been posting their version of your rom hack for years. They are fine. Square cannot enforce their legal threats over a fan made game that people give away for free.