Project 880
The animated film that Cameron was working on was "Battle Angel Alita".
It's based on Japanese cyberpunk/anime about a post-apocalyptic (but still somewhat high-tech) future earth. A defunct girl/robot warrior is found in a trashpile or something by a scientist and repaired and reactivated. Presumably after that there's lots of fighting....
On the surface it was pretty standard Japanaime fare, but Cameron's involvment would have made it "edgy", and strip it of any Japanese wierdness that the general American audience couldn't accept. (as opposed to U.S. Anime fanboys...)
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The new super-secret "Project 880" is rumored to be a live action film (As much as they are these days, anyway, with all the CGI...) called "AVATAR".
I read a script treatment of Avatar that's been floating out on the net some time ago, it's been on Cameron's back burner since the late 80's or early 90's. The notable thing is now all online copies of that Avatar script treatment are being pulled due to letters from a studio law firm. Curious...
"Avatar" starts out in a Blade-Runner'ized future Earth with high-tech, but lots of overpopulation and poverty. The protagonist is an unemployed crippled guy in a wheelchair, possibly a veteran. Earth is probably sufficiently high-tech to fix him, but poverty, overpopulation, and a huge "have's" vs. "have not's" problem prevents it etc.
He is informed by the .gov that his twin brother has died, and they need him for a secret project. The .gov has discovered a nice clean earth-like planet a few light-years away, but the planet is covered in super-dangerous plants and animals. Other than the forcfield covered base, humans can't survive long, even in exoskeleton combat suits.
To explore the planet they use an "Avatar", a mindless body of the dominant inteligent natives of the planet, and hook the "pilot" or "wearer" into it via remote control, a.k.a. "The Matrix", but into the zombie alien body instead of a virtual reality. Then they can survive the wildlife outside the base and explore with the help of the other natives. The protagonist is needed because the link and all the tech between the Avatar and the pilot is closely matched, and he's the only one who can replace his twin.
Learning that he can walk again or at least feel like it while in the alien body, get off the crowded dirty Earth, and presumably make some $$$, he takes the job, and gets on a "sleeper" ship for a few years while his Avatar grows to maturity in a tank on board. IIRC, the Avatar is linked to his hybernation pod to make the link stronger, etc.
He gets to the planet, meets the mean, paranoid, xenophobic company security chief running the base inside the force field. Gets plugged in to his Avatar, and after some training, he finds out that the dangerous planet is really beautiful, if you just learn to adapt and think like a native. While outside in his Avatar's body he meets up with an alien girl of the tribe who helps the humans, starts falling in love etc. etc.
Something bad happens, security chief goes bonkers attacking everything. Aliens fight back with all their animals etc. Earth is dirty and evil, wants to take the planet etc. etc. etc. The native aliens dominate the battle with all their super-dangerous (but misunderstood and "beautiful") plants and animals. They find the protagonist's crippled body in the remote control chair, and they use the planet's jungle which is really a gigantic "biological internet" to move his mind permanantly into the Avatar's body. He and the alien princess presumably bump alien-uglies, get married, and have lots of cute green alien kids. Greedy evil Earth is left to die in it's own squalor offscreen.
THE END.
Now that's what's rumored to be "Project 880". Of course, what I read was just a really old treatment, so the movie could be entirely different. Although if it really is "AVATAR", I'd at least expect to see the crippled guy remote controling the alien Avatar, and lots of space marine action. Don't know if there'll be the whole "dirty Earth" PETA angle to it though...