That was a rumor all along. Blabbermouth or some news site took a quote from a member of the band (along with the fact they recorded a lot of covers, one along with Chester) and assumed it'd happen. I believe Davis was later quoted as they hope it'll happen eventually, but that it isn't planned.
Going along with what enfestid said, I'm almost positive that no-one ever revealed that the title would be Korn Kovers, either.
http://www.lpassociation.com/forums/showthread.php?t=13739&highlight=kovers Billboard said it would be out in the first quarter of 2005. My guess is that the project is either cancelled or severely delayed. Hopefully, it leaks. I'd like to see Chester covering NIN.