Palmiotti's comments are the first I've heard that the project is "dead" at Devil's Due, but seeing as how there hasn't been any movement on it for several months now, I think it's a safe bet that American Wasteland won't be happening. It was a first foray for Devil's Due into the world of dealing with Japanese publishers/creators, and I don't think they realized the kind of hurdles you have to get over to make that work. We deal with it here ourselves on a daily basis, and believe me it can get very frustrating at times, so I understand. I think Devil's Due expected it would be a very loose thing like most American comics are, where the writer comes in, bangs out a rough plot, shuttles that over to whatever artist they can line up for it, lets them flesh everything out in the pencils, etc. Doesn't work that way in Japan. When the Japanese creator has approval over the process, which Kikuchi did in this case, you're not going to be able to move quickly. And you will have to defer to their wishes on a lot of things.
In the end, Devil's Due may have decided it was more hassle than it was worth to try and keep going. It's unfortunate, but it's probably why this sort of American/Japanese thing isn't done more often.