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Well there still isn't any news on the Dune RPG from the Last Unicorn Games website but an employee did make this post on the alt.fan.dune newsgroup:

Some of what you wrote is actually true, strangely enough.

Last Unicorn Games didn't print any copies of the Dune RPG. We would have loved to, but we had no money.

Wizards of the Coast purchased us. They have lots of money.

Wizards has their own house system, the d20 system. They want all games they publish to use variants on this system. Not unusual.

But, out of the *kindness of their hearts*, under no obligation to anyone, thinking only of the fans, they decided to print the original version of the game. They opted for a 3000 print run for several reasons, mostly because that's roughly what they thought the demand would be. It's been artificially inflated because of its rarity, but what can you do?

The same people who "butchered" the original version are now butchering the d20 version, including me. The original version went on sale yesterday on the WotC online store and sold out in a few hours. In spite of a 2 per customer per day limit.

This was in response to another post that questioned the rewrite to the d20 system. So the sale of lug has affected the game and I have heard rumors that it may not be released until next year although no proof yet. All this for a game that should have been released at the end of 1999 if I remember correctly.

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