A trusted source over at the NeoGAF boards has dropped some information on Factor 5. While we can’t confirm any of this as true, it’s still worth posting as a rumor.
So one of their (Factor 5) Wii titles is a casual game. The other one is a 3rd person shooter which takes place both in the air and on the ground. Unless they are going to make Kid Icarus a casual game, they do not have such a game in development. Nintendo might have denied their request.
Who really knows what is going on with Factor 5 and Nintendo. It’s not crazy to think that Nintendo got so upset with the leak of Kid Icarus that they canned it altogether. Stranger things have happened.