Update: as wrote by a former Argonaut Games developer “Hi All… just to let you know this article is false. Croc 3 was never in development at Argonaut (beyond a 2 page proposal I put together) and there was no Spyro demo.“
In 2001 during development of Croc 3: Stone Of The Gobbos, Argonaut Games developed a tech demo for an unnamed Spyro The Dragon game. The game was not intended to be released, however it was playable and had a homeworld. The game prototype was done to expand on the engine both Croc 3 and Malice used. It was a tech demo developed for Playstation 2. Nothing else is known.
Thanks to a former Argonaut Games employee for the information.