Torchlight II is not threatened by Diablo III at all

I was about to make a post of how Torchlight II is different than Diablo III, but it's a long, pointless discussion. Despite the lore and ambient differences, the design and such, Torchlight II draws a thick line with it's offline play. Yes, there will be a LAN play as an option in Torchlight II, but Diablo III is online-only, requiring an Internet connection, all the time.
Anyway, Runic Games has a answered few question about the whole TII/DIII thing in their updated FAQ. See for yourself. They're not trying to run with Blizzard. They only want to release a great game which already have a huge fanbase.
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Why don't they release it now before Diablo 3 is released and crushes their company?

Diablo 3 is going to be released in 2012. Torchlight 2 will be released in 2011. There is no overlap here.

They should release it now because everyone will forget about the game once Diablo 3 is out.

You may be surprised to hear about this, but Runic Games isn't worried about Diablo 3. The games don't particularly overlap. Diablo 3 is online-only, on secure servers, with absolutely no modding and will likely cost 50-60 dollars US. Torchlight 2 will be playable offline, over LAN, or over Runic's Peer-to-Peer online service, with or without mods, and will cost ONLY 20 dollars US.

Is this the team that made Diablo 1 and 2?

Ooooh, fancy question, let me give you a fancy answer. Max and Erich Schaefer, founders of Blizzard North and the heads of the Diablo 1 and 2 (including LOD expansion)'s development teams, are among the founding members of Runic Games, with Max being the CEO. Matt Uelmen did the music for the original Diablo games and is doing all the music and sounds for the Torchlight series, including using the same orchestra. Peter Hu was the man behind the Diablo 2 1.10 patch, but left Runic Games some time ago. However, the other 30 or so members of Runic Games hail from different places, so it would be inaccurate to say that Runic Games is the original Blizzard North development team. However, to my knowledge the other members of those original Diablo teams are no longer at Blizzard, and are not involved with Diablo 3. Extrapolating, neither team is Blizzard North, and thus each teams' work should be judged on its own merits, not their histories. (My personal opinion)