I am actually playing Breath of Fire 3 right now. Great game and it reminds me of all the charm that old RPGs had back during the SNES And PS1 era. Sounds like the continuation of the series is rather slim right now. The video game industry seems to be going through a weird time. Back during the SNES And PS1 era, I would have never guesses that this popular series would come to a halt.
Japan seems to be closing up more and more by appealing to their interests only and its understandable. They aren't making the money they used to with modern JRPGs in the international...or at least, western market. Still, I think there is hope. Side scrolling games with crisp sprites and graphics have been making a come back on the Wii (Super Mario Brothers and Donkey Kong). I think all the players who are now older still have fond memories of the JRPGs of old. Japan just needs to learn how to balance the amount of influence they have when it comes to the western audience. What I mean by this is to tone down the amount of things that make sense to Japan only. No more crazy character art, weird fashion craziness stuff (I am thinking of Quina from FF9), ect. The western audience isn't in to that as a whole. Now that many of us have grown up from the SNES/PS1 era when we were kids and teenagers, our tastes have changed. I don't want to play a hero who is a kid or teenager. I want to play a character who is a grown person.
Look at games like Skyrim. We seem to be on the opposite end of the spectrum from what Japan likes and the western audience. Its all about finding the balance and I think many of the players who played those JRPGs from before will come back...because they won't have to feel silly playing a game with a character portrait like Quina in front of their friends.
Lastly, JRPGs need to move to another possible platform. When I was a kid, it was not a worry to play from a handheld device. Now that I am older, I have kind of moved on. The solution? Release JRPGs on a digital platform - something like Steam. It will cut back on costs from a manufacturing perspective since it will all be digital. Plus, many of us have embranced PC gaming. After all, hasn't the MMORPG market become extremely popular? These thrive on the PC market. When they release many JRPGs on the PSP or 3DS...it might work from Japan but perhaps not in the same way for the western audience.
Just my opinion.