Was there an official Fox announcement that work on additional prequels had begun? Besides Ridley saying the story was in the work--which probably means it's in the works between his two ears.
The series was toast as soon as they decided David created the Xenomorphs.
Whoever made the decision, "Lets run with that" should never be involved with writing another story ever. It's one thing to stumble if your trying to come up with something from scratch. It's quite another to take one of the most ominous and mysterious preexisting back-stories and reduce it to a joke. This shouldn't have been that hard to create prequels that made sense when viewed within the context of ALIEN.
The prequels didn't need to directly tie into ALIEN at all. It shouldn't have been that hard to come up with an mind-blowing story of how and why the Jockeys/Engineers created Xeno's? Have explorers that predate ALIEN come across this information in frightening fashion. Toss in some plat twist that ties into Prometheus--To create sometimes one must destroy. Call it a day. The pre-Covenant story theories floating around on this board would have been infinitely more satisfying.
You can have Xeno's in your prequel because they should have been kept as effing ancient beings. At this point they should just go straight Starship Trooper. Have the Jockeys show up with DinoXeno's and stomp Davids army out of existence