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Sounds like a fairly ambitious schedule(2012 is only 4 years away). The next step is for TxDOT to hire a consultant and start a preliminary design with several alternates. Then, they will start having public hearings to satisfy Tx law and the FHWA(federal highway admin.), probably at least 2. They will gather public comment and work that into a DEIS(draft environment impact statement) and then let the public have final comment on the selection of the final alternate. This will include a chapter on the right of way needed and that there is plenty of replacement properties to move the affected people into. Normally, the consultant makes several of the alternates somewhat outrageous(going though the only park, etc) so that the public settles for the actual "real" alternate the DOT has already quietly advanced as the "favored" or "preferred" alternate(and probably makes the most sense in a practical, engineering sort of way). The next step is to present the findings in the form of the FEIS(final envir. impact statement) to the FHWA and other control agencies(like Corps of Engineers) for the FHWA's Record of Decision. The findings get published in the record(local newspaper). At that point, the DOT can start buying land and enter final design phase, with construction to follow in 12 or so months. That is roughly how you get a federal aid highway built in the US of A. The DOT is very good at this and are normally are the only experts in this process at the table, so they have a great advantage over the locals in running the show.
At the present point in the process(meaning today), you guys should hardball them, and get whatever promises you can to make the design work for your town. Since they probably are seeking consensus with you, you have leverage at this point. Their position hasn't crystalized yet, and you have time to make a difference(but you ain't gonna stop them).
The cost estimate at this point is based on historic costs of building X lane miles through your territory. It ain't real, just a number to get it started and get an allocation from the Capitol for this particular project.
Expanding the highway makes sense in the big plan sort of way, as in completing the plan, and Texas is big on road construction vs mass transit and has been that way historically. But an interstate will change you local patterns forever in some good ways and some no so good ways. If I were on your planning board I would study this very carefully and maybe hire an expert of my own to be a counterweight and verify the DOT plan as a good one.
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