I just now heard that a while ago they were talking about making mods playable on consoles? Has there been any furthering of this news or was it shot down?

Nope, no mods on console

It will never happen. Also, source?

Won't happen.

http://www.ausgamers.com/features/read/3076322

One interview with talk of console mods and possible problems with them.

As far as any of us outsiders know, it hasn't been scrapped. All we know for certain is that Bethesda really wants to do it. We also know that most fans want it, and that most of those fans play on Xbox. We also know from Todd Howard's interviews that not only can it be done, not only is it being done, but they've been doing it in-house since Morrowind.

The sand in the gears is all the stumbling blocks involved in making it viable for the unwashed masses. The mud that makes the sand even worse is cost. Bethesda has to look at return on investment. Sure, it'd go a long way towards building product loyalty, but it might be more profitable to just ignore all the issues with console mods entirely and just focus on their next big hit.

Technically, it's not of mater of "can they do it"? it's a question of "Will they do it"? Personally, I hope they do.

Some Mods are possible and can work on consoles but goes across your MS and Sony Contract without an actual dedicated site monitered for 360 and PS3 users to do such and many of them will break your console. Also the way of doing such is not allowed to be discussed here on the forums