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They did come back together one last time. Also, in an issue of EGM 2 (wish I could find the scan), Nintendo was still going at it alone, if only at a vaporware level, after Sony bailed.
Nintendo is frequently casted as the bad side, but the thing was complex - like how the contract apparently had been written in a VERY favorable way for Sony. I forgot details as some articles on this, but I think Sony had EXCLUSIVE rights - royalities? - on an aspect of the thing at least. And somehow slipped unotticed by Nintendo.
Something not entirely unlike the SNESCDROM is now being implemented as the MSU 1 expansion chip. I'm required by law to plug this wherever adequately appropriate: http://board.byuu.org/viewtopic.php?f=16&t=546
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How well does it match the trope?