Despite Intel's purchase of Project Offset and the game's internally-developed Offset Engine back in early 2008 and the subsequent licensing of the engine to MMO developer Red 5 Studios, the game has been in development long enough for the term "vaporware" to be bandied about when it's discussed in certain circles.
None of these factors have prevented the development team from posting a new short trailer for Project Offset called 'Blind Giant,' sending out a signal that the project is still alive. While this latest showing isn't quite as awe-striking as it would have been a few years ago, it's still pretty impressive. That said, it's unclear whether what's being shown is actual gameplay or not, and (as noted in several Project Offset discussion threads) some of the audio from the clip seems to have been borrowed from other games.
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Very little new information about the game (besides the trailer) has been revealed recently, though according to an article on IGN's Team Xbox website back in 2007, Project Offset--once thought to be a PC-only title--is being developed for the Xbox 360.