I really want to stay positive here since REvelations is looking decent but...
I guess it's true; 零/Fatal Frame IS dead...
They put a some thought behind remaking 2. It was the best selling of the series in the US. Ironically, 4 was the best for Japan, and its not coming here ever. Might Crimson Butterfly 2011/2012 be a US exclusive?
The series can survive fine if they give us complete games. I might even be an ok idea to do what they did with all the PS1 RE games and port them with New play controls to either the 3DS or the wii. This title is just a spin-off and might not even be canon to the tales that follow Kunihiko's Camera Obscura and the intertwining of rituals from each title.
I feel 2 was a good place to start for a reboot if they every wanted to, it was truly an amazing experience and it is the most important in as the documents in the game tells how the rituals all managed to effect a participant in a ritual from a different installment. The ghost you encounter in the first game are children (as adults, having lead to have normal lives) that escape the twin ritual in past back story of the 2nd game. There is also hints on how the dream mansion from 3 came to be.
This franchise has a lot going for it. They just need to put a face to it that could really sell the title. I'm put famous horror directors or actors in the CM for the title.
edit: Have you ever seen the original SIREN commercials? Those were really good and I feel accomplished embodying the fear you'd experience playing the game very well. They can do a fully first person CM and then have it zoom out to you holding you 3ds in the end of it. They just need to find a why to deliver gameplay and premise in one shot.