Half-Life 2's third DLC episode was never finished because Gabe Newell and company didn't just want to finish the Half-Life 2 story arc, but to do something big and innovative with the game design, and as Newell put it in a new documentary, he was "stumped."
But also in that documentary, released for Half-Life 2's 20th anniversary, there's footage of some pretty cool-looking Episode 3 stuff, including an ice gun that could be used to build transparent barriers, but also in "kind of like a Silver Surfer mode" that lets you run across ice ramps as you build them. The detail that there'd be an ice gun was known previously, but as far as I'm aware, this footage is seeing the light of day for the first time.
There were also some neat "hoppy blob" enemies that used Portal 2's gel tech and could gobble up headcrabs, divide themselves, and pass through grates with their amorphous bodies—if you want to see 'em, the bit of the documentary that covers Episode 3 starts at about an hour and 53 minutes in. You can watch it in the player above or on YouTube here.
I guess I must not be Valve dev material, because if they'd put out Episode 3 with the ice gun and blobs in 2010ish, I probably would've been fine with it. Sure, it wouldn't have blown my mind like Half-Life 2's Striders and Gravity Gun did in 2004, but you know: ice gun, blobs, the rest of the story. I'd have been into it! That wasn't enough for them, Newell said in the documentary.
"You can't get lazy and say, 'Oh, we're moving the story forward,'" he said. "That's copping out of your obligation to gamers. Yes, of course they love the story. They love many, many aspects of it. But saying that your reason to do it is because people want to know what happens next, you know—we could've shipped it, it wouldn't have been that hard. The failure, my personal failure was being stumped. I couldn't figure out why doing Episode 3 was pushing anything forward."
Not everyone from Valve is in agreement, though: "We could've definitely gone back and spent two years to make Episode 3," said engineer David Speyrer.
Hey, who says the window has passed? Half-Life 2 did just get a big update for its 20th anniversary: Along with the documentary, Valve added in-game commentary and made a bunch of fixes. It also now includes Episodes 1 and 2, and is free for a limited time. Maybe that big idea will come to Gabe one of these days.