There is an unbelievable amount of work to be done on this still. I'm well into episode 4, and I'll probably end up finishing it last due to the sheer amount of eventing that needs to be implemented in the dungeon area. I need motivation to do it, and that probably won't come until I'm on the final leg of creation.
The recreated areas from the first game are mostly done, or at least, the towns are. I'm gonna try and figure out new world routes so that you aren't traversing the same forests and such all over again, but they're gonna be there anyway for side quests and recruiting party members.
All in all, the plan is pretty much set for the fifth episode. It'll be a whole lot of character based storylines, and finally takes into consideration your choices from the end of the first game in a pretty big way.
For those of you who won't be able to recruit Midard or Haddy, fear not, there will be differing storylines and quests in their place. I'm not cheaping out on that, as it would make the whole idea of past choices pretty pointless.