MM8 started development right after MM7 finished, but there was a lot of shuffling around of staff right at that time. The senior level designers (myself and Ken Spencer) went off to work on a new game (what would become Legends).

The 'newbies' were put on MM8. It was designed by Tom Ono and James Dickinson from the ground up as MM8. Neither of them had been designers on MM7, so that might account for why it was different from MM7.

Here's where you might be getting things confused:
In the middle of Legends design (it was supposed to be a first person Diablo type experience) the networking wasn't going to support that. So it was turned into the fantasy Counterstrike that everyone knows and loves. So that might be what you're thinking of.

Another thing that you might have been thinking of is MM9. MM9 was originally designed by Tom Ono, and I took over after he left. I didn't like the direction he was going (felt more like final fantasy than MM) so I changed it and created a new storyline in the Mendossus area. Then 3DO decided they wanted this to be a PS2 game...so the Medossus MM9 became a PS2 game.

Then they came back and said they wanted a PC game that was different from the Mendossus story. So I came up with a new storyline that became MM9: Writ of Fate.

The PS2 game got cancelled and I repurposed the Mendossus storyline for MM10, which was never released.