it isn’t economically possible to create Amiga disks anymore. The prices were far too high and supply was very short. We also had issues creating a master disk to go to manufacture so that even if this disk price and shortage was not an issue our systems cannot now master an Amiga game. And finally retail were not very keen on supporting an Amiga disk as a promotion. They they had no way of checking if a disk was returned as faulty
I find this line of argument very unconvincing, there are various companies still releasing wares for various floppy-based systems so it can't be that hard. Floppy disks are still widely available brand new, eg. at
it works out to $AUD0.73 per disk. That's buying at retail, in quantities of only 10. In fact, they are cheaper now than they ever were back then, even without adjusting for inflation. Prices were about $AUD20 for a 10-pack back in the early 1990s IIRC. (Or, of course, they could release it on eg. CD-ROM).
Any Amiga could be used for mastering, unless they are planning on including eg. weak-sector copy protection. If they can't release it protected, then release it unprotected, it's a better outcome anyway.
In my experience retailers don't check returned discs/disks for media errors, as there are other valid reasons for returning software (eg. it doesn't work on a configuration that it is supposed to work on) which are nothing to do with media errors. So it's just more of his lies and excuses.
It seems to me that we aren't reliant on System 3 for Putty Squad anyway. Presumably the Amiga playable demo contains the full game engine, most such playable demos do. So surely it would be feasible to combine the game engine from the Amiga demo and the level data from the full SNES game and end up with something very similar to what System 3 is refusing to release anyway.