It's so obvious that I'm surprised they didn't think of it earlier.
That said though the ending is a bit of a downer (at least to the movie) and the animation/art is absolutly dated.
I have to wonder how an update would fare, not to mention what they would do for a plot. If they simply retread the movie (as opposed to going into the TV series, which I have not seen all of) I think a lot of people who were not fans of the original would be a bit disappointed. Especially given some of the plot holes.
Also the artwork is so distinctive, stylized, and actually fairly pathetic by today's standards, that it has lead to parodies, satires, and homages going back to like "Project A-ko" and other works. If they update it, people are going to scream bloody murder, if they don't update it people will scream bloody murder.
Obvious game/franchise combination, but really... from the screens we've seen I'm not sure how this is going to work out. Everything that Yahtzee says about fandom in his "Monkey Island" review pretty much stands here, albeit to the 10th power.
Oh and speaking of which, Yahtzee hasn't quite been spewing as much bile as usual, it's been a while since my monitor melted. Would someone PLEASE make him review "Dynasty Warriors Gundam 2" ? >