Details of Diablo Junior, as well as plans for a second Diablo 2 expansion, were revealed by David Craddock, author of unofficial Blizzard biography Stay Awhile and Listen.
"Following Diablo 2's release ... several other developers ventured into groups of two or three and put together proposals for smaller projects," Craddock told Shacknews. "One of those was given the working title Diablo Junior, a game tentatively planned for the Game Boy Color and/or the Game Boy Advance, depending on market share and other business-y factors."
Craddock explained that the handheld Diablo Junior was positioned as a prequel to the original Diablo game. "Taking a page from Pokémon's book," he says, "the team wanted to release three cartridges, each packing a different hero in the warrior-rogue-sorcerer vein as well as items that players would have to trade for in order to collect. Heroes started in a unique town before heading into dungeons and wilderness zones."
Ultimately, Diablo Junior never left the drawing board, due to the "steep production costs associated with developing handheld games".
Meanwhile, Blizzard were kicking around preliminary ideas for a second Diablo 2 expansion pack to follow Lord of Destruction. Before being scrapped, the plans involved improvements to Diablo 2's multiplayer features, upgradeable guildhalls for player groups and "proposals for two new character classes".
Again, the project was pooh-poohed and sniffed at, probably in that order, before Blizzard North began work on a full Diablo sequel.