This is not a story about a hacked game with supernatural powers or a grim image. This is about something more simple. This is about an official non- released Nintendo games whose authors realized their errors only once they completed it.
Mario Loops was destined to be a Mario Galaxy spin-off where you travel front way (think Yoshi Bazooka in third person) on a space-floating looped path. Instead of the classic save the princess plot, the game is based on a storyline inspired by Sonic. In place of the traditional Koopas, we get robotic versions who transform into heli-packed toads who flee off-screen once killed. So yeah, Mario meets Sonic in a nutshell, but there is more to this and there lie the reasons of his banishment.
The synopsis reads so:
Bowser has kidnapped the toads and turned them into his personal army of KoopBots. It is up to Mario to free them before Bowser adds him in his numbers.
Already, the idea that Mario is himself in perils is unsettling. And, effectively, if Mario dies we see his groggy body being dragged off-screen by Bowser's hand with the classic game over music playing.
But the mention that it is for Bowser to robotize Mario is actually a white lie directed to the youngest players. The game over screen (or rather what's shown when you lose you use your last life, as there are no game over screen to speak of) tells a different story. It starts like the other death screens; the difference is the camera pans over and under like a metal remix of Bowser's theme, then we see his shadow pull Mario over his mouth and drop him in.
That why the game was never released because it is the first and only official Mario games when we see him die for real.
How I know about this game? Well, there is a vast black market online for this kind of rare game. If you search enough, you may get your hands on it.