The way I see it Two-Face lives. I believe even Nolan said at one point if they don't die in the comics then they don't die in his movies and then smiled. And this was in an interview BEFORE the Dark Knight was released.
Now on to my main reason for posting my perfect first teaser for the potential next movie:
It opens with Harvey's quote "You die a hero" and they show the ceremony from the end of Dark Knight, "or" ::flash to arkum:: " You live long enough to see yourself become" and as you hear this the camera takes you through arkum and freezes on a cell and you just see the glass on the door. "the villain" at that moment lighting flashes and you see the burnt half of his face
then it says what ever the movie is going to be called Summer 2011..
what do all you peoples think