The question isn't "was Kelly Toy going to make a chao plush?"
It's....Was Kelly Toy going to make a CHEESE the chao plush?
This single photo, which is actually a still from a video shot at a toy show, is the only evidence anyone has of Kelly Toy's plan. It may be faced away, but that's doubtless a neutral chao. But if you have a good eye and look very closesly, you can see red between the arm and the head. That's likely a bow tie, making the chao into Cheese. From this angle, it looks very good, actually, which is a little bit of a surprise from Kelly Toy because they've been known to botch things with Sonic. This is super interesting to see, and a rare sight indeed.