I see two possibilities/explantions about the game.
It has been in production for so long that the technology they started with is no longer realistic to use in a modern game (read: Daikatana)
OR
The designers are afraid of the first point happening that they keep re-writing the graphics engine to match current expectations from games, therefore it will NEVER be released.
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I do know that it is going to have to be so damn good, becuase if it's not AMAZING after all this waiting (read: C&C Tiberian Sun) there are going to be som VERY pissed off gamers.