The idea has been around awhile, and they've been earnestly working on it. As you can read in the links above from Ornery, NASA has recently cut the program because of delays and cost overruns. They were set to test the engines last year when a crack was discovered in the fuel tank, and subsequent inspection revealed more problems (materials problem with the design of the fuel tank, difficult to produce).
So, no sub-orbital space plane in the near future.
On a side note, if you are interested in this sort of technology news, you should subscribe to Popular Science. It's a great magazine for technophiles, and it's usually around $12/year or so. I've been a subscriber since the mid-'80s.