Obsidian and Red Eagle promptly went into radio silence on the project. Last year I assembled a post based collecting together information from Tweets and interviews. Unfortunately, it appears a lot of the information I found was actually based around their then-unannounced South Park RPG (particularly the stuff about an exciting property they really wanted to work on and the need for 2D artists).
More recently, Obsidian have run into difficulties. A project they were developed under a codename, 'North Carolina', for Microsoft Games was cancelled unexpectedly. There was a theory that this was the Wheel of Time game (based on the admittedly rather thin notion that Robert Jordan lived in neighbouring South Carolina), but this seemed unlikely given the length of time since the original announcement and the fact that 'North Carolina' was going to be a launch project for the X-Box 720 (or whatever it ends up being called), whilst the WoT game seemed to be for this generation.
In this interview with Rock Paper Shotgun, Obsidian writer Chris Avellone comments on the projects currently in development at Obsidian:
"A project..." - presumably North Carolina - "...was suddenly cancelled. It happens in the industry – in this case, it affected a large number of employees. We’re working hard at finding them jobs, and friends and developers in other companies also were great in coming forward and helping us out, so many thanks to them. We’re still working on two projects: South Park, and a team focused on pitching our second project that we put on hold for North Carolina."The second project could well be the WoT game, but if so that meant they don't have a publishing deal in place for it, and that means it is without a development budget and is thus on hold. However, since Obsidian were partnering Red Eagle on the WoT game, it may be more likely that Red Eagle (as the rights-holders) should be handling that side of things. If so the second project isn't the WoT game either, and thus it is either on hold or has been cancelled.
Hopefully we can get clarification on this point soon, but in any case, it sounds like it will still be some considerable time before a new WoT game hits our screens.