A few other sites have already started discussion on this, however nothing absolutely certain has been revealed. All we know is that the log flume has seen its end (and I'm quite torn. That was a BA ride...)
You can see pictures of the log flume demolition on TPR and Valleyfairzone
These pictures were produced by members of Valleyfairzone.com
The area in question of construction.
The rumors suggest most likely a B&M Floorless or Invert. However a wave pool (yawn) has also been talked about. It's a 2009 or 2010 project.
Discuss and/or add to the updates. Either way, I'm excited to see what's up [8)]