Introduction
Lazarus is a remake of Ultima V, using the Dungeon Siege engine. It will feature an enhanced storyline, characters, and setting based on the original Ultima V. It will be most true to the original, but also improve the game with new side quests, a deeper and richer plot, and enhanced dialogue.

Engine
Ultima 5 Lazarus will use a heavily adapted Dungeon Siege engine.

Adaptions to the DS siege engine include (ao)
ship travel
horseback riding
dual wield (two 1 handed weapons simultaneously)
a complete new dialogue system

Project leader Tiberius Moongazer on the DS Enginge:

The Siege Editor allows us almost 100% freedom to create and edit any aspect of the game, even doing large-scale alterations like implementing ship/horseback travel and our own combat rule-set. It's also designed with a seamless world in mind, and supports a part of controllable characters. For those reasons, it is our engine and editor of choice.
The downside of the Siege Editor is that it is much more difficult and inefficient to use than some of the other options - especially when it was first released and was notoriously buggy. We're getting much faster with it now, but it still presents many challenges for our worldbuilding department.

Story
The plot as well as the dialogue will stay very close to the original. The dialogue will be rewritten to the level of quantity and quality that was in Ultima VII. One of the biggest improvements will be the addition of "banter" between party members, similar to Ultima VII. The team has included lots of party comments and witty banter, along with U7-style "barks" from various NPCs in the game.

World
The overall world map will be almost identical to that of the original. There will be at least two new mini-dungeons.
Town maps will be larger and more realistic, but still be based on the originals, and will contain all of the original NPCs and buildings. There are roughly twice as many NPCs in Lazarus as were in the original All NPCs will have a full day/night routine.
There will at least as much world interaction in Lazarus as there was in the original Ultima V. The bulk of the weapons, armor, and spells will be taken directly from the original game.
That players will probably make much more use of alternative forms of transportation, like ships, horses and moongates.

Team
Lazarus has 20 members listed on their website, but probably about 30 or more people working on the project.
Project leas is by  Ian 'Tiberius Moongazer' Frazier, a Senior in the Computer Graphics Technology program at Purdue University. There are many team members, well known to the ultima community. To name a few;  Michael "New breed" Hilborn (who holds many positions on the team) is the author of the Interactive fan fiction The Dark Core. Vitor "Grandor" Zimmerer, who did a great job on the Ultima IX dialogue patch. Laura "Shadow of Light" Campbell, holds the Dragon press and also works on Ultim IX Redemption. Christian "Hacki" Hackl runs the extensive Hacki's Ultima Page.

Release
There is no official release date. Lazarus was once said to be released 'somewhere in 2003'. Although they are working hard and steadily on the project, if the Game Status (35%) on their website is correct, we'd better think of not before late 2004.
Lazarus will be freeware, available through download, and maybe through freeware cd's shipping with game magazines. You will need to have the original Ultima V files installed on your hard drive to run Lazarus. In addition, you will need a copy of Dungeon Siege installed.

Website
Their web designer Aegis Kleis has done a great job on www.u5lazarus.com. It holds the latest news about the project, along with plenty of concept artwork and music. An extensive, but not recently updated faq is also available. Surf around and pay attention to the details, like the Lazarus facts (Ultima V is the first Ultima to include the Avatar's pocket watch) and the possibility to talk to the team members ultima-style.
A Gameplay Guide will be available upon the release of the Ultima V:Lazarus. It will provide users with the 'how-to's' of playing the add-on.