I was reading about the Half-Life 3 development recently and found this Wikia article quite interesting. As I read through the page, it became apparent that Valve has had some serious difficulty figuring out what they want to do as a studio and with HL3. It can't really be summarised, but it seems quite clear that Episode 3 is toast and that Half-Life 3's development is still in its early stages.
I think most people saw this quote but it remains the most telling thing Gabe has said about the game IMO (Ricochet is an obvious reference to HL3 based on the way the question was asked BTW):
"In terms of Ricochet 2, we always have this problem that when we talk about things too far in advance, we end up changing our minds as we're going through and developing stuff, so as we're thinking through the giant story arc which is Ricochet 2, you might get to a point where you're saying something is surprising us in a positive way and something is surprising us in a negative way, and, you know, we'd like to be super-transparent about the future of Ricochet 2. The problem is, we think that the twists and turns that we're going through would probably drive people more crazy than just being silent about it, until we can be very crisp about what's happening next." When asked if those working on the project have moved on to other games, he responds, "No, everybody who has worked on Ricochet 2 continues to work on Ricochet 2."
I can see what he means. It sounds like Valve has changed its mind about the direction of the game numerous times, going from it being purely episodic to it being an 'evolving' game with new levels being added all the time to it being a social game. I guess we should thank the heavens Valve decided to do these things with other games instead, but imagine if they'd been open and told us they were considering doing these things with HL3. People would have gone fucking crazy. It's better to just be quiet and wait until they eventually decide on their true direction, and get all this other shit out of their system first.
I have no doubt that Half-Life 3 will come, but actively waiting for it is retarded because this is Valve and it could take so long it's not even funny. I think they'll deal with Episode 3 by having it be some kind of prologue to the game, and then Half-Life 3 proper will be just as different to HL2 as HL2 was to HL1.
It was in San Andreas.