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Since Fangus was never released, there's no saying whether it takes place on Oddworld or not. It certainly was at the start of its development, and it certainly wasn't when development was cut off, but since the developers responsible for transforming it from the first state to the second state are no longer its developers, there could theoretically be regression.
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I thought at some point Lorne basically said "Well, it's not Oddworld but keep workin on it".