Michael Rooker has confirmed that he will be back as Merle Dixon.
Merle, the brother of Norman Reedus' Daryl, was handcuffed to a pipe in Season 1 and left for dead. He was forced to cut off his own hand to escape a horde of zombies on a roof, and we never saw him again...Though, Merle did pop up again this season in Episode 2.05: Chupacabra, when Daryl started to hallucinate after being badly injured.
Michael Rooker has also revealed that he lost 20 pounds to return as Merle. It isn't known if this means we may see him as a decrepit zombie. There is also speculation that Merle may join forces with The Governor, who we reported last month will be played by David Morrissey. The Governor is the leader of a survivor settlement entitled Woodbury, so perhaps Merle found his way to Woodbury and was given life-saving treatment for his missing hand.
Production begins on The Walking Dead Season 3 this May in Atlanta. The extended 16-episode season will likely debut sometime in October, during AMC's annual FearFest programming.