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See AllFootage of Canceled Half-Life 2: Episode 3 Revealed
With as much respect as I can muster towards them, it was cancelled by sheer ridiculous excuses. First being that they basically only want their games to be tech demos (showing off new gaming mechanics and such). Second being because they think the engine is outdated and that by extension nobody would be interested. Third being they're genuinely just lazy (again with as much respect as I can). Marc Laidlaw has had a completed script for it, but they don't/won't see it as canon due to it not fitting the above mentioned factors. The problem with this is that its not really up to them outside of it being mapped, in terms of the actual story, given that it IS in fact Marc's story being the one who wrote all of it, that is the correct script. Long story short, they won't because they prioritize things THEY like rather than prioritizing things FANS like. It's nothing new in gaming, loads of companies do it thinking they're pushing the boundaries, but thats the reason. And then by extension to this, I would advise you go and read the script Marc wrote, it's the closest we'll get to closure.