Despite the heavy hints in Iron Man that Jim Rhodes, best friend to Tony Stark, would come to play War Machine in a future film, it won't be Terrence Howard reprising his role as Rhodes in the forthcoming sequel, but rather Don Cheadle. According to the Hollywood Reporter, there hasn't been a formal announcement by Marvel Studios about it, but the casting swap appears to have come as a result of money matters (natch).
Returning still are stars Robert Downey Jr. and Gwyneth Paltrow, in addition to director Jon Favreau, as Justin Theroux, fresh off the success of Tropic Thunder, currently tinkers away at the script. Last month, amidst the press blitz for the Iron Man DVD, Favreau confessed to wanting to incorporate both 3-D and IMAX technology in the making of the sequel (to which the world collectively replied "[BLEEP] yeah!").
Alas, it remains for the Paramount/Marvel number-crunchers to determine in which format exactly we'll see Downey Jr. and Cheadle team up come the summer of 2010.