Sundberg tweeted this morning, "The steampunk game was shut down in 2008. We lost ~90 [developers] in the process. Now, 5yrs later [Avalanche] is doing better than ever."
"I really love that art style, and to combine it with sandbox gameplay is a dream of mine," he told Edge. "Fortunately, being an independent developer I can control my own destiny and we'll make something in that world sooner or later."
Another "almost" Avalanche Studios project was a "massive, open world" Star Wars game, but that fell through and now is more unlikely than ever. Whatever Avalanche is really working on will hopefully be revealed by E3.