Nothing but good news this time. There will be an Episode 2 released in 2010, most likely by the end of the summer. It will be built exclusively using the upcoming RAGE engine (expected to be released in early 2010).
But that doesn't mean Episode 1 will be neglected! The Killer Riffs is overdue for some performance tweaks, so to borrow a practice from Microsoft I'm going to start "dogfooding". Episode 1 will be rebuilt using RAGE and the entire project will be available as a separate download.
What better way to showcase RAGE's capabilities than to provide a full-fledged sample project?