Double Fine have confirmed that Brütal Legend is not dead. (Unlike the weevils Tim Schafer found in his cereal and has been posting photos of to Double Fine Action News.)
In fact, it's via Schafer's latest snapshot of dead weevil-age that the famous designer of such games as Full Throttle and Psychonauts delivered a status report on Double Fine's next creation. Mousing over the photo (under "More Information") reveals pop-up text which reads "Brütal Legend is fine." Rawk. Of course, there's still the matter of who's going to publish the game, given Activision Blizzard's apparent (and, as many agree, unfathomable) lack of interest in it.