Ancient Echidna mural, depicting a hedgehog with raised-up quills using the power of the Chaos Emerald, which is being held by a mustached figure with a triangle nose and glasses.
As told by the picture above, Gerald was obsessed with ancient Echidna society, so he probably stumbled across the mural at some point. While it clearly shows Sonic retrieving the Master Emerald from Eggman at the end of Sonic 3&K, Gerald must have misinterpreted it as the ancient Echidna tribe having a prophecy that he would create a hedgehog with the power of the Chaos Emerald (one with raised quills, might I add.) He must have been running tests on the prototype Ultimate Life Form around this time. Since that one was slow and unintelligent, and needed a huge life support pack with a major weak point to survive, a new, small, better form would be much more convenient. Plus, hedgehogs are very fast and strong in this universe, which would help if this Ultimate Life Form is to save humanity.