The project we know as "Knol" (and according to some people, also known as Unipedia) is of relatively low priority. The "Knol" project is Google's attempt at taking on Wikipedia by paying topic experts (who can be anyone, about anything) write authoritative articles, and get paid for them. According to "Sally" on the the Google Blogoscoped forum, someone she knows worked on this project, but has recently been assigned to a more urgent project.
If this is true, I wonder if the hype about "knol" about a month ago was mostly precautionary due to the coming launch of "Wikia Search". Now that they realize Wikia will be a really long time before it will ever compete, they have pushed the priority lower to work on more important things.
"Knol" was just the codename for this project. I know a google employee who was working on this project, but he says it is not what google call a "GP 1" an "urgent" project.
He was called away to work on a GP1. He says the REAL name of the project is "Google's Universal Encyclopedia" or "Uni Pedia".
There is no proof this is legit -- and I'm even suspicious of the whole "Unipedia" name. Going to http://www.unipedia.com takes you to a site that appears to be hosted by Google, but it's clearly not if you trace back the IP of that URL using ARIN, and look at the whois entry for the domain.
Keep your eyes on this login page -- it will likely be the login page you are redirected to when knol finally launches.