TLDR version: I think this game is great for competitive play, and Rare should really reconsider bringing the franchise back now, especially while fighting games are hot.  
 
While search the other day through a local-used video/videogame store that has a lot of classic games in there (they have a freaking Intellivision in there!), I found an N64 with Killer Instinct Gold. And playing it recently, the game still holds up remarkable well even by today's fighting resurgence. 
 
Now, I haven't played the game since about 1997 which at the time I was only 13-14 years old and didn't really have a firm grasp on fighting game mechanics. In Street Fighter II, MK2-3 and Xmen vs. Streetfighter, I kind of just mashed buttons and had a blast. 
 
After spending a lot of time with the new MK, MVC3 and Street Fighter IV (all editions), I can say the fighting mechanics in Killer Instinct Gold are pretty complex and challenging and now that I have a better mind and understanding of the game, could really see this game on a competitive level. 
 
For those unfamiliar, Killer Instinct uses a combo-linking system that is somewhat similar to MVC3 style of buttons where you can use lighter/quicker hits to combo in harder hits and vice versa with special moves and finishers.  
  
  

i liked it...the wolf guy was my fav. 
 
Killer Instinct, Darkstalkers and... 
 
PRIMAL RAGE 
 
  

It would be cool , but they would have to rebamp a lot of the mechanics of the game me thinks , also maybe the combo breaker should be modified in order for it to be competitive (as no easy to do them) ... I dunno it would take a lot of effort to pull it off (and better character models for females , they are hideous)

@marioncobretti said:

As someone that played more of Killer Instinct in the arcades than any other fighting game, I'm pretty glad it has stayed dead. It really wasn't very good at all.

Yeah, Killer Instinct, while flashy for its time, was really shallow. Killer Instinct 2 just took the combo system in a more ludicrous direction. And while the cast of characters was "edgy" in the '90s, when everything was XTREME, today they're mostly a mishmash of concepts jumbled together with no logical sense.

Seriously. Killer Instinct's premise makes Mortal Kombat look like Moby Dick. And that's not even counting MK 2011.

if microsoft ever let RARE off of the leash this could be a possible of a downloadable fighter on XBLA. i think KI could wprk if given enough time to get it to the proper standards. (also relase a new killer cuts CD)

I'ts been time for a new Killer Instinct for a decade now. Too bad it ain't happening, though. Rare has been nerfed to hell, which is a damn shame. Strangely, though, unlike many other studios, I haven't heard of teams of people splintering off into their own independent studios. That usually happens after a studio is closed, though, so I guess they're still happy to draw a reliable paycheck.

KI was great for its time. A new version could be a contender. I agree with the TC