According to the news linked in this eve-o post (and not refuted by CCP) World of Darkness no longer uses the Carbon engine. I am guessing poor performance with handling multiple avatars as one of the major reasons. Further, that so called "prototype" that CCP presented appears in no way feasible with the current Carbon character engine, so if they are determined to take that path, a new engine is required.
Personally, I think the prototype is a piece of hogwash and just an excuse to not bother with WiS. I cannot comprehend how instanced arena battles in anyway resemble PvP combat normally found in Eve. Also, I am convinced people will still try to ignore the combat element of these instanced arenas and instead use them for other kind of social interaction. Social interaction* is an element that CCP is vastly underestimating the potential gain from.
*: By social interaction I mean something else than jerks trying to cause each other grief.
ADD: Mr. Kidd from Center for Advanced Studies appears to have come to the same conclusion as me.
Uh, Carbon is the back end stuff, like databases and connections between nodes and clients. Not sure how you'd want to use a database server to render avatars. I am not aware what the engine drawing avatars is even called, but the rest of the graphics engine is still mostly based on an evolution version of Trinity II as far as I am aware. As for functionality, the walking in closets engine feels very, very clunky - CCP probably wants something that looks and feels a lot more smooth movement wise, even outside of choreographed tech demos.
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