The most recent developer chat for Shroud of the Avatar was held a couple days ago, and featured Tracy Hickman and Richard Garriott (among others) talking about various aspects of the development of Forsaken Virtues:

Some takeaways from the video include:

• Lum the Mad is evidently doing more than just website work for Portalarium; he’s building Shroud of the Avatar’s conversation system!
• Portalarium are looking for input from the community concerning cultural rituals that the people of New Britannia might engage in.
• They will evidently be partnering with Rooster Teeth again come July, this time to show off some (not so pre-alpha, presumably) gameplay footage. Slated for demonstration are systems like crafting, house decoration, combat, and exploration.
• New Britannia will be torn by class strife. Avatars and adventurers from Earth will face a poor welcome in most (though not all, necessarily) areas.
• The Shroud of the Avatar novel Tracy Hickman is writing should begin releasing chapters in about mid-July.
• This one will appeal to Ultima fans: They are considering implementing a bag-based inventory system not unlike the one in Ultima 7. Players may be able to switch this to a slot-based system, optionally.
• At the end of the video, Richard Garriott even speculates about removing many of the interface elements from the screen, and using visual cues of different kinds to communicate information (e.g. health, magic points) back to the player. Another obvious Ultima 7 influence!

A whole lot more than this actually got discussed in the course of the chat; the above are just some of the more interesting points. A complete recap of the chat can be found on the official Shroud of the Avatar forums. Or just watch the whole thing, above, if you have an hour to spare.