Despite a couple of fair-sized radio hits, Mike + The Mechanics has always been Rutherford's "side project". Their last album was in 2011, and the last one before that was 2004. And of course the 2007 Genesis reuinion. But yeah, he hasn't been super-busy lately that I know of.
He's not a "powerful rock bassist", but I don't see why that's a requirement here. Despite ARW being composed of former Yes members, and the inevitable comparisons to Yes if and when they finally record something, I don't see why the bassist has to be viewed as a Squire substitute. The whole point of making it a different band is to make different music and have a different sound. Rabin has said that he's done with Yes, and has no interest in revisiting Yes.
If I had to guess, the biggest issue with getting this project off the ground is probably that Anderson will want it to be "the new Yes" and Rabin wants nothing to do with that. Wakeman just wants to play with Rabin, and he's always up for working with Anderson. Rabin has always wanted to work with Wakeman, and is open to working again with Anderson. So why, in over 20 years, has this never happened? I have to believe that there's a fundamental difference in their vision for the band.