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It seems from a job advertisement on Ubisoft’s France website that there is going to be a Red Steel sequel released for the Wii. Below is the advertisement from Ubisoft

Game Designer Senior Production/Development; The Studio of Production of Paris seeks Game Designer for the continuation of the Red Steel project. You will assist the Person in charge game design for the project: - in the management of ergonomics - in the design of the menus - in the redaction of the documents game system. You will have in load the design and the follow-up at least a key feature of the project.

The translation is a little bit rough, but it seems clear that work is going to be beginning soon on a sequel, which may be named “Fighting Steel” which Ubisoft recently registered as a trademark in America.

Source