According to Surfer Girl, Red Steel 2 was almost done.
If it'd stayed on course, it would have been with us right about... now. Sadly, the Ubisoft Paris team developing the title, and Ubisoft's higher management, didn't see eye to eye on the quality of game. Not only was the team's work entirely scrapped, it was shifted to another group at the studio. Surfer Girl even reports that people lost jobs over the debacle.
Now Red Steel 2 is slated for late Q3 2008. I doubt Ubisoft will comment on this rumour, but Surfer Girl's been pretty spot on with her other revelations, so there's no reason to discredit this.
PS. Surfer Girl is a separate entity to the person known as Logan. Which is me, and I'm most certainly not a girl. Well, as long as I have one Man card in my deck. We even had a dialogue not so long ago.
Disaster: Day of Ubisoft's Wii Problems [Surfer Girl Reviews Star Wars]