As far as I know:
1) The Dominions engine has grown over about ten years, and is too big of a mess for major changes.
2) Illwinter guys do this for fun, and Johan (the programmer) works long days with computers on his main job.
Because I don't think Johan would enjoy working 20/7, half on his work and half on updating the Dominions engine, I don't think there will be another game based on it. I hope Illwinter will continue making games, and because I've liked all four games of Illwinter I've played (Dom:PPP, II and 3, and CoE2), I think I'd also like it, even if it wasn't Dominions.
3) An unnamed, non-Dominions 3 related project exists.
Quote:
Kristoffer O said:A bit further since last time, but I've been slightly preoccupied lately. Most of my energy has gone into school (or rather sleeping when returning home from school) and recently our other IW project. I'm a bit stuck Dom3-wise, waiting for the crashed computers to be restored to enable patchwork again. I have done some map-work while waiting. Added shades under most forests and smoothed mountain edges.
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See this post. It could be anything from paying taxes to buying Bioware, although the latter one would've failed now that Vivendi out-did their offer.