I'm so reluctant here, but it does seem that Gabe Newell has suggested that Valve are working on a completely new version of their previously incrementally improved Source Engine. Source 2, as Newell seems to accept for a title, would rather dismiss the company's previous frustration at queries over whether such a thing might exist, formerly shaking their fists and crying, "But Source is already Source 2, and 3 and 10!" In the same poorly recorded interview of a gathering of Valve fans interrogating Uncy Gabe, he tells them that they're also working on "Ricochet 2", which Reddit is assuming is a code for Half-Li- Nope, can't bring myself to type it.
The original video is a few days old, but has only had a couple of thousand views until now. The shorter video below, originally sourced from the now very offline Lambdageneration, comes from /v/'s trip to Valve for Gabe's birthday. And is edited here by ValveTime.
At 1:20 someone asks Gabe about Ricochet 2, presumably meaning a third Half-Life. (Ricochet was Valve's one flop, a rather peculiarly bland multiplayer game that never really became anything - Ricochet 2 can be filed alongside "Fart Cops" as recurring codenames for Valve's projects). This is then interrupted by someone else asking about Source 2, to which Gabe appears to reply (it's very muffled),
"We've been working on Valve's new engine stuff for... a while."
Someone else asks if it's not just another upgrade for Source, but an entirely new engine, to which Newell replies with a pretty definitive, "Yeah."
It's Erik Johnson who says that Ricochet 2 is now in development, and with a grin on his face. I'm calling bullshit on that one on two levels. First, Half-Life 3 will obviously have been in some sort of development for many years, however many incarnations may have been scrapped. And it seems reasonably sensible to assume that they're not really developing a sequel to a game that came to nothing. Especially as elsewhere in the original video Newell asks them not to ask about Half-Life 3.
So, well, what do you reckon? Are Newell and Johnson just trolling /v/? It'd be eminently apposite. But it also wouldn't be surprising if Valve chose this of all ways to announce it.