It really is an absolute shame.
I certainly hope a sequel appears.
Considering it probably didn't sell well, I highly doubt it which, like you said, is a shame. I'm not sure if it was the marketing or just not a lot of people unfamiliar with the comic or first game. Seeing as how the game ended, they definitely left room open for a sequel. In fact, I wouldn't mind so much if they just went with a Witchblade game and tied it into the ending of the second game. Kind of still surprised they never have made a WB game, anyhow.
Again, this is one of those games where a lot of love was put into it. Graphics, voice acting, story and everything was a labor of love. On top of that, it was an FPS that offered something different in a generation filled with FPS games.