Either KOS and the stuff it comes with (paralax and tsunami are pretty good), or some custom libraries. I have some, which aren't that good, but they do (kinda) work, and tend to work equally well on both the Dreamcast and any other system you care to port it to, which is currently Linux/SDL, although it'll probably work on Windows too. They need rewriting, and I'll probably release the updated versions when they work acceptably.and the alternatives are....
We do have a workable OpenGL-like 3D library. If you program with it in mind, the stuff will probably still work on other systems too, because it's largely compatable with OpenGL (it's a subset of OpenGL, and as long as you only use the supported features, you'll be fine).
Anyway, back the the game...
That's a very ambitious plan, DaMadFiddler. The main problem is the sheer ammount of work that'd be required (art, sound, music, models, levels, textures, programming). Might be a bit difficult to organise, and a few things might need to be cut down.
One thing I have been wondering for a while - would it be worth the effort of writing a fairly generic 3D engine, designed mostly for third person 3D work? I wrote part of one for the DreamOn contest, before we had to withdraw. If an engine like that were made more advanced, with a significant portion of the game code moved out of the engine and into various scripts, it would probably be able to serve as an engine for a game like this as well, along with pretty much any third-person perspective game, and possibly other types of games as well.
The main problem with coding 3D games, as rusty said, always seems to be the tools and the data formats. Once you have decent data formats, and you've planned everything properly, it just becomes a (relatively) simple matter or actually coding the thing. That takes time, but it's not terribly difficult if you know what you're doing, and you have a decent design to work on. The only difficult parts of the actual coding would likely involve resource management, and getting the thing running fast enough on the Dreamcast. The data formats and tools would need to be designed with all that in mind.