Dance Studio still "on the list," say developers
Still, the question comes up from time to time, and it came up again during the recent Twitter developer chat. The developers answered that it's still on the list of things to do, so it appears it hasn't been completely abandoned. They also mentioned that they always start expansions with more than they can do and prioritize from there.
This, of course, brings up another question all on its own: What can we expect to be late in Cataclysm? Should the developers really announce things they don't think they'll have time to implement? Of course, it's part and parcel of the MMO game that features are pushed back a patch or two, but after over a year, there might be a time limit on how long you can be expected to wait. Still, I'm all for more character customization, so I'm glad it's not completely abandoned. With any luck, maybe we'll finally see it before patch 5.0.