I think I've said it several times before. Nintendo does not seem to want new franchises from Western development studios on Wii. They've killed the Headstrong Games title, they've killed the n-Space title. It appears as if they want to rely on their old franchises.
Of course, quite a few Retro employees would've loved to work on an original IP. As a result, some left after Metroid Prime 3 was finished, some others (Armature) left after the Zelda title was cancelled.
All in all, I've heard that Retro might have some management issues - of course not to the extent we can see at NST. At NST, most veterans left in the last 3 years because of shelved projects and bad management (Where did they go? Many went to Microsoft)...
For E3 I only expect their "Escape Room" puzzle collection...
Then there's another bit. Factor 5 DID work on a Kid Icarus project, as evidenced by artwork and character animations of Pit and some enemies. However, and this is speculation, it was only a project pitch; we do not know whether Nintendo approved the concept or whether they didn't. It is a fact nonetheless that Factor 5 worked on a Kid Icarus game, either with or without Nintendo's approval.
Returning to the question whether Retro is working on a Donkey Kong game, yes. Wouldn't it fit pretty well into how Nintendo deals with its Western partners? :lol