Emacs doesn't seem to be much of a failure. The GCC is used by everyone. However, admittedly, they are written by RMS himself.
As noted by tl, EMACS suffered a nasty fork, and it bears pointing out that RMS started with a fully functional version of EMACS written by none other than James Gosling of Java fame. RMS replaced Gosling's MockLisp with a real Lisp (both bytecoded), but the guts remained largely the same.
That was a matter of much debate that started to conclude when RMS did GNU Emacs, in 1984 when Common Lisp was also officially released for the first time, the latter's biggest breaking change perhaps being static scoping.
Were you thinking of anything else?
But I also understand that Lisp isn't a family of function languages. Functional is just a style that's possible and encouraged in Lisp, not required.
Obviously some (many?) implementations of Common Lisp provide it, but I'm not sure it's something you can particularly depend upon (I got out of the Common Lisp community in ... 1984 and haven't seriously used it since then).
Then again, I myself wouldn't necessarily describe Common Lisp as a modern Lisp anymore, it's essentially been frozen in amber when it standardized and it's filled with legacy cruft, perhaps most especially it being a Lisp-2. Scheme's standardization process has become glacial, but there is one (well, two, RnRS and the SRFIs). Clojure is much like Lisp Machine Lisp in the early days, although it should be past the worst of breaking changes by now.
There's nothing inherent about Emacs that ties it to being an editor, it could have been rewritten a long time ago in Scheme or acquired a FFI. Then things like GNOME or TextMate might have been rewritten as part of the Emacs ecosystem, while looking exactly like they do today.
Instead Emacs is a very specific thing to a small crowd, and adding things like a FFI to it have been vetoed by Stallman in the past. That's one of the reasons I think that we still don't have Lisp as a first-class systems programming language on GNU as the initial announcement promised: http://www.gnu.org/gnu/initial-announcement.html
GCC is much the same. There was a proposal many years ago to make a libgcc. Stallman vetoed that on the basis that things like C++ support might be written without contributing the changes back to the FSF.
That's a fair point, but LLVM+Clang are quickly replacing GCC in some areas due to its monolithic architecture. You can't write things like a C source code using GCC as a backend (easily), but you can with the LLVM tools.
So RMS failed in one execution for a still extremely excellent toolkit that would have make the GNU project even more well known for its excellent technical quality.
If anything, the GNU project is a great tremendous success, even if it is sometime dogged by its own short-term political interests. If he didn't listen to his political interest and instead focus on technical quality of his work, he would have achieved something much greater for the GNU project and his movement.
It's also losing some users like Apple and the BSD's due to the GPLv3 switchover.
I think that in the long term the GNU project will become increasingly irrelevant due to most of their crown jewels being hard to maintain, and there being political opposition to changing that.