Finally found the pic for this thing. As the story goes, in 1988 Atari was working on two Next-Gen systems, the 32-bit Panther and the 64-bit Jaguar. Work on the Jaguar proceeded faster and the Panther was scrapped (had both machines been completed the Jag would have followed the Panther by two years.) Panther was supposed to be up and running to compete with the 1991 SNES launch. We all know how that went.
The Panther had three chips, working in tandem, consisting of a Motorola 68000 running at 16Mhz, an object processor called the Panther, and an Ensoniq sound processor called Otis, featuring 32 sound channels. The Panther could supposedly display 8,192 colors from a palette of 262,144 colors and could display 65,535 sprites of any size simultaneously.
It appears that some of the hardare from this machine ended up in the Jaguar (for instance, both machines have a limit to the amount of sprites that can be displayed on any certain scan line without "tearing." )
As for games, rumors are Panther-pong, Cybermorph, Raiden, and Cresent Galaxy were ported to the Jag from the Panther, although chances are there were more than a few other Panther projects that ended up as Jaguar games.
The sad and confusing (and ugly) Jaguar controllers were originally desgined for this system.
From a technical standpoint the Panther could have stomped all over the SNES, and problably would have (all things remaining equal.) Atari's decision to abandon the Panther and go with the Jaguar cost valuble time which could have been spent building a dedicated constomer base. By the time the Jag was finally released there was Next-gen Competition in the form of 3DO and 32X. The arrival of Sony's Playstation spelled the end for Atari as a console developer.
At this time three Panther Prototypes are known to exist, along with one technical manual that has the source code for Panther-Pong.