The MK Bible seems to be completely lacking in rumors after MK2. I started this thread so we can recollect rumors from MK 3, and reclaim them as part of MK fan lore for the rumor sections of the FAQ.

Here's some old MK3 Lore:
The Ghost of Johnny Cage: The only really famous rumor from MK3, Johnny Cage Morphs made up most of the fake MK 3 pictures that circulated on the net.
Raiden:The God of thunder was conspiciously absent from the 3rd installment of Mortal Kombat. Raiden Morphs were heavily rumored. Nightwolf's friendship perpetuated these rumors.
Goro: There was a heavy rumor about the return of Goro in MK3. It never came to fruition, like the Cage rumors, it was linked mostly to the graveyard.
Erinmac: Erinmac was supposedly a red female Ninja, that was played by one of the cheerleaders from NBA Jam. Rumor has it this character was actually filmed, and was then taken out.
Cyclone: The second made up character, many people on early MK3 sites reported fighting a aquamarine blue ninja named Cyclone. He was supposed to have Sub-Zero's spine rip as a Fatality.