From: Manchester, UK
Last I recall they were working on re-writing the AI, which with a small dev team (2?) might take a while. That said, I must admit I thought "uh oh" when Battlefront was announced, and I still wouldn't be very surprised to see CA:WW2 quietly canned at some point in the same way Combat Leader was. Which would be a shame as CA looks by far the more promising game of the two.
I can't speak officially, but I think I can confirm a couple of things.
Firstly, the dev team is indeed currently working on the AI and it is even smaller than you allow. We did get an update in the dev forum last month, though, so I know this is progressing.
I don't think for a second the game will be quietly canned because of Battlefront. I think it will be completed and released, but until the AI is done, final tidying up, bug hunts and scenario balancing is difficult. Once the AI is in, I think you'll see things step up, because scenarios are built and features/gameplay are coded. Some scenario balancing and a bug hunt won't take years, but
I can't speak for or about Battlefront, but I do think CA will set a new standard. With WEGO action, dynamic formations/OOBs and lots of detail under the hood, I think it takes the TOAW benchmark in a new direction, and will be worth the wait. That said I understand your frustration, because I'd like to play the finished article as well.