http://www.youtube.com/watch?v=tTmK1pu4ZjU Apparently Nintendo doesn't like American pitches for their properties which is only part of the reason this CG movie never came about. Who can blame them after all everything outside of the video games (which need a bullet to the head) have been terrible including the cartoon show that I'm sure people look back at way too fondly. Here's some info from the video's description:

I sincerely doubt it's down to the character designs being more akin to Imagi's style, rather than the more familiar Ocarina of Time/Twilight Princess/Skyward Sword look of the Zelda cast, but Nintendo from the early 90's onwards have always been pretty ruthless at declining any Movie for their properties, especially American, (they're possibly still bitter after the car crash that was the live action Super Mario Bros movie) but it's an interesting thing of what could have been!

Via Nerd Approved