An Isuzu V8, huh? Now that's interesting, I can't recall anything from the brand this side of the 4200R that had such an engine... Although I doubt that a FWD coupe could really fill the gap of a Camaro, considering how short-lived the Daytona was against the Charger.
Long post coming.
The circumstances with the Daytona is a bit different in that regard. Dodge could give all of the media buzz for the Decepzione that they wanted, but 1989 was a pretty terrible year to give obviously fake reasons for canceling an engineering prototype. Even as the first Daytonas rolled off assembly lines, nevermind the Shelby Turbo Z ones or the Decepzione, the ink was drying on the contract for the Diamond Star Motors plant. The fact that the AWD Eclipse/Laser/Talon came out of the program, designed from the start for AWD and 200 horsepower instead of a discontinued Lamborghini engine that didn't really fit and a cobbled together AWD system, is what doomed the Decepzione. The top spec Daytona Turbo could still reasonably compete with the top spec Eclipse GS-T on paper, and the interior redesign in 1990 helped immensely; but the Eclipse was clearly the more modern car with the better chassis
and it was a little cheaper. Why Dodge even bothered with the later IROC R/T I never really understood, so there was no chance they were going to try and put the Decepzione into production as soon as the AWD DSM cars started hitting the market regardless of how much ground clearance it had.
The Feretta was much more complicated, because of GM's incompetence in the 1980s. GM in the mid 80s were working on a dedicated offshoot of the W-Body (at the time known as GM-10) called GM80. It was to use the same initial starting point as a W-Body, but have a steel spaceframe and composite body panels like Saturns, Dustbuster minivans and the Fiero. The GM80 was the car that was supposed to replace the Camaro/Firebird by the end of the 1980s; but Oldsmobile was supposed to get one too. Because the cars used the Fiero-style production process, they actually were going to be very different from each other in styling.
For example, here is the Olds:
And here is the Firebird and Camaro (Camaro is the red one):
They were constantly showing up in car magazines at the time from spy shots of preproduction mules. The doors and windows (and mono wiper!) were all the same, but that was about it.
By the beginning of 1986 the program was put on hold and the Camaro/Firebird replacement pushed back to 1991, because it had gone quite a bit over budget mostly because they didn't consider that making a much larger car than the Fiero would dramatically increase the price of the production process the Fiero used. They spent a ton of money trying to figure out how to make it cheaper before concluding that nothing they could do would make it much less expensive than just building them out of regular steel (which would kill the differentiation), and they were having serious trouble with the FWD transmission development to support a car with enough power to call it sporty. At the time GM needed the money and resourced to be put into the Saturn brand (which at the time was falling behind schedule) and the GM-10 (since the Taurus was in dealers and the program was already a year behind and
billions of dollars over budget). By the end of 1986 GM cancelled the whole thing, but didn't comment on what was happening to the Firebird/Camaro after that. They quickly had Isuzu put together the Feretta to gauge interest in how much people would be interested in a high performance Beretta instead of replacing the Camaro/Firebird. The Feretta had an engine that was
in line with what GM wanted to power the top version, but the GM80 platform was cancelled before GM had started working on specifics. If response was good, they were just going to kill the Camaro/Firebird entirely and just sell fast Berettas with GM 80 styling and hotter tech laden V8s, and it would allow them to bring the launch date back to their original plans. Probably what they should have done in the first place, since the Beretta was a very popular car when it launched, but that's neither here nor there; and it's good that they didn't because the L-Body platform was eventually infamous for how willowy it was.
1987 was also when Ford started doing preproduction work and testing on what became the 1989 Probe, but was supposed to be the 1989 Mustang. And rumors had been getting out about it up until this happened:
Ford had been trying to keep a lid on it to try and beat GM to to the punch with a Mustang replacement since the GM80 problems were well known, but it blew up in their faces. People
hated what became the Probe, and hated that Ford was going through with it even though gas prices were going back down, and
hated that they believed Ford had let the Mustang wither on the vine in order to justify it all. Ford didn't expect any of this, so they just pushed the Mustang back to 1994 while they reworked it on the cheap and sold the Probe anyway.
So GM ultimately did the same thing. They cancelled the development of the engine entirely in favor of doing the quick and dirty conversion of the 60 degree V6 in the Cavalier and Beretta to a twin cam for use in the Lumina Z34. This showed a lot of promise in development, but was again stymied by lack of suitable transmissions because they wanted the automatic and manual to have similar performance and the Northstar transmission wasn't completed yet (
and probably wouldn't have fit anyway) and had to be dramatically detuned. The hottest Beretta got the Olds Quad Four instead, and GM quickly showed a couple of styling concepts that were updated/wilder versions of the styling from the GM80 cars to reassure everyone that the Camaro/Firebird weren't going FWD:
And then toned them down again for the production models, which mechanically was mostly a strengthened and stiffened version of the previous generation with powertrains that debuted in the Corvette when it was re-freshened in 1991 (1992 models had some of these improvements too). That's why the 1993 Camaro and especially the 1993 Firebird have something like a foot of empty space in front of the engine block before the front end of the front bumper, because they adapted the styling and hardpoints from originally FWD cars.
In a somewhat ironic note, in the time between GM canceling GM80 for production costs and debuting the 1993 Camaro/Firebird, they managed to come up with a plastic composite production process that made it viable to use in the final car anyway.
FWD and V8s do not mix well if I remember right. I know the 2006-2009 Impala had a V8 in it, as do the new ones, but there's gotta be a ton of electrical aides to help the car keep the power down.
While what you're saying is mostly true (Cadillac never
quite managed to crack that egg, and when they got closest with the final Seville it was already obviously too late for them to have have continued trying) and that particular car
was a disaster, GM actually put a decent amount of effort into the W-Body V8s
except for the Impala. The Grand Prix had a bunch of suspension tricks and heavy duty parts, bigger brakes and a strengthened steering rack, transmission fiddling and some nifty ideas with tires to try and mitigate the disadvantages for shoving a big 330lb-ft V8 in a chassis designed 20 years prior for 200 lb-ft V6s. The Buick got most of the same stuff, but tuned softer. The Impala didn't get any of it. All of them were transmission eating disasters (again, just like the problems GM had faced with the same transmission in the 1980s) that only two years later would be matched by the very same Impala with the 3.6L and 6 speed auto in a drag race, but the Impala (and Monte Carlo) was the worst of the lot because GM did everything they could to make the sticker price around the same as a V6 Accord or whatever.