Yes! I have heard of and downloaded it. It never was made for mass production, but did make it as a Prototype.
Of course, there is little reason for explaination as to why it was never relased. Not only was that computer chip market crash a reason, but the game is... well.... pretty awful.
Basically you just walk around, trying to catch the other player, and grab keys to lock the doors (for no apparent reason, I guess) and these little blocks block you from moving. It is a very boring repetitive game, even by Atari standards.
There was also a released game that was much more fun (though, derivitive) called Pigs in Space, featuring Link, Piggy, and Strangepork in three different games (each one gets his/her own) Piggy's game was sort of like Donkey Kong, Links was kind of like Space Invaders, and I do not know much of the Strangepork level.
I have downloaded this one too, but I can only get it to play the Link game.
The difference is that, instead of Space ships, you face Chickens. And instead of a space ship flying by, it's Gonzo (maybe he was an alien to begin with) and.. instead of dying from laser beams, the chickens shoot something that turns you into a chicken.
Wacky city!