[citation][nom]robochump[/nom]Is Valve working on HL Episode 3? WTF?!?[/citation]
They have a team dedicated to EP3 and are working on it. My guess is they want it to be the perfect close to the HL2 series. And I understand. HL2 raised expectations, just like HL2, to a all time high and because of it we have even better FPS games these days. And the Episodes thus far have been amazing in story and gameplay.
HL2: EP3 will probably be just mind blowing and worth the wait.
As for the Submarine game, if VALVe releases it, I will buy it. They deserve my money. They have given me some of the best gaming ever in my life.