I think everything we have heard (about Matt leaving to work for Homeland Security etc) is true, but whether Matt decides to come back to the music industry one day or not no one knows. I guess it will just be a matter of how he goes without it. He might be a happier man, and we will never hear from him again, or he might miss it and talk to Jon about re-joining the band, or starting his own band. As for Jon giving the replacement the boot, it depends how good he is I guess. Remember Matt was a replacement, and I don't think Jon would EVER have given him the boot.
Also, I am damn sick of everyone saying how Matt 'isn't a songwriter'. Hell, some of the songs he has co-written and done lyrics for etc in Iced Earth are fantastic, and even if he is a little restricted, that doesn't stop him from being able to join another band.