This was after they already scrapped a version that had been in development for like 4 years, and restarted with a new studio they acquired (Swingin' Ape Studios, who had made Metal Arms: Glitch in the System (2003)). I think with the first iteration (the one that had a major leak a few years ago, primarily a 3rd person shooter/stealth game, kinda like Splinter Cell) they kept changing priorities to find the fun. With this second iteration they added multiplayer and vehicles and things (probably influenced by Halo's runaway success in the years since they'd started), but I don't think were super far along on the single player.
I think the decision to cancel this one was more because they saw they would still be like 2 years out from release, and next gen consoles were already coming out (Xbox 360 released in Nov 2005, same year as OP's SCG multiplayer demo photo). If SC:Ghost didn't come out til like 2007, it would have been going up against stuff like Halo 3, and while this multiplayer build looked very fun, it looks like early 2000s fidelity. Faced with the prospect of either releasing a last-gen title well into the new console generation, or having to remake all the assets again for next gen, they were probably just ready to cut their losses and start developing SC2 instead.
Here's a 2005 multiplayer trailer for it:
Edit: also check the comments below for the trailer for 2005's Splinter Cell Chaos Theory, to compare with a more polished stealth action game from the same time period!