Back in July we received an interesting spy report on set construction in Australia. We weren't sure if the source was legitimate since we couldn't confirm what was being said at the time. But as we've seen more details similar appear to be reliable, we thought we would go ahead and post part of this report now as rumor, and let you be the judge on the rest. Second, there's also a small clip from a more confirmed source about C-3PO in a later paragraph:

(Original email dated July 2000) Construction was going on on a cave-like set with blue screens on either side of a stone walk way. This was for sure. Now supposedly, a large chair with machines all around it was supposed to be put in later. There are definitely caves in the prequel.

Also I heard that construction was going on on a big (about 20ft) bat-like vehicle that was required to be able to hold at least two people.

Then this from a separate source about that location, C-3PO and what may happen there:

The way I understand it, C-3PO gets his body plating during the movie (possibly completed in a cave?), but the chest piece is a different color - blue - I think. He's with someone else I believe, too, and the name escapes me, but I'll write back with it soon.

So there's more rumors to enjoy for while.

UPDATE
Open-a-Windu was the first of many to contribute these thoughts to us after reading the above post (spoilers):

Just thought I'd throw out some speculation your way real quick. Why would Threepio have a blue chest plate? My guess: The chest plate could really just be a little blue screen on Threepio. That way they could put in some CGI gizmos moving around later... Making it so someone like Daniels could be inside 3PO but also still have him not completly finished. This method would be similar to the one used by ILM with the movie "Death Becomes Her". Remember when Goldie Hawn got a hole shot through her? They put a little blue dot on her stomach!