Over at Reddit Gabe and some other Valve team members are doing an AMA:

We are continuing to use Source 2 as our primary game development environment. Aside from moving Dota 2 to the engine recently, we are are using it as the foundation of some unannounced products.

Check it out

"What is the status of Half Life 3/Half Life 2 Episode 3?"
The number 3 must not be said.

"Is Valve still working on any fully-fledged single player games?"
Yes.

"An unidentified anonymous source at Valve has said that Half Life 3 has been cancelled. Is that source legitimate?"
I personally believe all unidentified anonymous sources on the Internet.

Gets me enough hope for my HL3 demand for at least a year or two.

We also intend to continue to make the Source 2 engine work available to the broad developer community as we go, and to make it available free of charge.

Might of already been stated in previous interviews, but nonetheless.

This guy should be in politics.

Kind of looking forward to Source 2, but I really don't want to go through the fuss of moving to a new engine. As much as Source can be rough around the edges, I am used to it. As for Half-Life 3, Valve has just become such a different company from what it was during the development of Half-Life and Half-Life 2 and a good number of people have left who had been involved in those projects. I am not saying I wouldn't take a look at Half-Life 3, but I sincerely bet I will be disappointed by it. If you don't have the same people working on a project, styles and the overall feel can change. It is almost impossible for it not to.

I'm really not that impressed by the new and fancy graphics of many new games out there. Most of them are just unoptimized messes and have little to no advancements in A.I. New multiplayer games are a mess.

The real future of games is through independent developers, corporations are just a black hole for talent, innovation and quality - attracts a lot, doesn't let anything out.

I'll welcome the new engine any time, if it has brush based modelling for it to quickly create, it'd be nice.

Right now we have Hammer which has easy to use brush making, but really lacking displacements that easily fuckup, 3 kind of props that often fail to load even after you select the one the model browser says it should be, lots and lots of various compile errors and my bloody hammer crashes from time to time for mundane reasons.
And the lack of a central window for entities makes larger systems a pain in the ass to keep track of.

I still map in source, but getting a new update to it can't come soon enough..