This project is still in the works, yes, it's just taking an incredibly long time.
The only playable character(s) would probably only be Sonic, unfortunately. Maybe there can be Tails, Knuckles, Tiara or Amy Rose in the multiplayer mode (just as reskins, like the multiplayer in Sonic 2), which has been confirmed by Andrew, but it's not confirmed any other characters are going to be playable.
There weren't any special stages shown to the public in X-treme, but Andrew is adding Chaotix-like special stages in AXSX, to get whatever MacGuffins are put into the story, most likely the Chaos Emeralds.
There weren't much boss fights shown either, so that's a definite yes for boss fights. What's a classic Sonic game without a boss at the end of every zone?
The objective in the game is the same as the Mega Drive games, as X-treme was planned to be a complete 3D rendition of the classics, so yes, you just have to find the end of the level.
Unreal Engine can't work with the Sega Saturn, as it's too modern and too advanced for the poor thing. It would be cool if someone made a remake of AXSX for the Saturn though, though I bet it's going to be inferior to the PC version.
Those are most, if not all, of your questions answered!
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