IGA explained what possessed him to make a 3D fighter with some fairly smart reasoning: people want to swing the Wiimote to whip, and he decided it would be best to implement those kinds of mechanics in a shorter-session game. "... I realized, with the 3D action style, I would be able to incorporate intervals so that players can rest and this would allow players to enjoy the swinging action of the Wii Remote." IGA also mentioned that part of the Elebits/Dewy team is working on Judgment, which should at least ensure lovely visuals.
IGN's hands-on with the game gave us a bit of morning light to vanquish the horrible night of our skepticism, describing Judgment as more of a Power Stone free-roaming vs. action game than a traditional Tekken or Virtua Fighter-like game.