I can't see AO working on any touch based device. Some of the puzzles simply require too much speed to accuratly get through on a (sometimes not completely registering) touch screen. Imagine playing through the last level or the temple finale's. That's already a lot of button bashing on a controler or a keyboard, and they want to port that to a touch screen? Nuh-uh. Not gonna work.
If they are developing something for the iPhone I think it will be a completely new project, not simply a port. It might be released under the name Abe's Oddysee, but it will be a completely new game with new puzzles and new gameplay. Pretty much like MO for the gameboy. Same title, completely different game.
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