check the twitter blog. they mention that their most recent weekly playtest/focus group was on an Act 3 dungeon.

The game isn't being developed in a linear fashion so us saying we're working on things in Act III doesn't really mean anything in regards to how much of the game is finished.

Since we're constantly evolving the tools and processes for creating the various assets for the game (and just plain getting better at it), it's best to have as wide a perspective as possible. Otherwise we'd probably paint ourselves into a corner. All of the work being produced at the end of the game would look far and above better than the stuff that was produced at the beginning, and so we'd probably have to go back and redo a lot of that work.