According to Antoniades, one idea had players discovering Nariko "trapped in Hell by the spirit of the sword." Coming to her rescue would be Kai, playable in the real world and somehow able to "communicate with Nariko and try and help rescue her soul." Fascinatingly, the potential sequel would have played with the movement of time -- one day in Hell represents a year on Earth -- and as such, Kai would transform from "teenage girl to old woman" throughout the course of the game.
The Voices of a Distant Star approach to the game's storytelling could have made for an interesting, thought-provoking journey. (Certainly more so than EA's Dante's Inferno.) However, it's unlikely this concept will ever come to fruition. Last we heard, Ninja Theory is no longer involved with the series.