Project-AC team is currently working on brand new Half Life 3 project (or Half Life 2: Episode Three if you prefer) in Source Engine. Project-AC is descirbed as a modification for Half Life 2 that is partially based on the motives of the Episode Three or Epistle 3.
Source: N4G PC Project-AC is another fan-made Half Life 3 project, partially based on Marc Laidlaw's Epistle 3