Not an engine rewrite - a jump between engines. When Duke Nukem Foreverstarted, it was running off Unreal Tournament's engine. Yeah, the first UT. At some point, they converted it over to UT2004's engine and now it's rumored to be running on Unreal Engine 3.
I've heard within my circle that Duke Nukem Forever really is happening and is in development, but it has obviously been slow and arduous. I think the release of Prey confirms that 3D Realms is dedicated to the game taking as long as it needs to get done. Prey, as a concept, started some eight years ago, although the Doom 3 engine game we know it as began roughly two years before to its ship date. And Prey turned out alright... still probably the best use of the Doom 3 engine.
I wouldn't get your hopes up anyone, I remember seeing quite a lengthy video of Duke Nukem Forever gameplay (much much more than this teaser offers) about five or six YEARS ago. I'm not going to beleive it's anywhere near release until I'm holding it in my hands.