I found this interesting entry, dated February 2004, at travelmole.com. Sounds hopeful.

Vesuvius railway to reopen after 60 years

Some 60 years after it was last used, the famous Thomas Cook funicular railway on Italy's Mount Vesuvius is set to reopen. The railway, which was opened in 1880, and had to be rebuilt after the volcano erupted in 1910, was shut in 1944, when the last major eruption happened. Now, according to The Times newspaper, the railway is to be restored to its former glory following an agreement between the Campagnia region of Italy, the Vesuvius National Park and the Vesuvius Observatory. Amilcare Troiano, of the Vesuvius National Park, reportedly told the newspaper that the railway will initially run from San Vito to the observatory, some 200 metres from the top of the famous mountain, and that eventually it would be extended to the very top of the volcano. Thomas Cook and Sons owned and operated the railway from 1888. Report by Tim Gillett, News From Abroad
Friday, February 13, 2004

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this not-so-hopeful entry in the Telegraph, dated 15 May 2007:

£20m railway line under the cloud of Vesuvius and mafia war

By Malcolm Moore in Naples12:01AM BST 15 May 2007
A £5.5 billion transport project in Italy that includes a railway to ferry tourists to the top of Vesuvius has become mired in controversy amid warnings of an imminent volcanic eruption and a mafia war at the foot of the mountain.

Herculaneum, a town at the foot of the volcano, is to be the first stop on a £20 million reconstruction of Thomas Cook's 19th-century funicular railway. However, there is a "one-in-two" chance of the volcano erupting in the next few years. A survey of the volcano last month warned that 300,000 people could die in an eruption.
"The rule is that the longer the period of inactivity, the bigger the eruption," said Augusto Neri, of the National Geophysical and Vulcanology Institute.
Vesuvius erupted eight times in the 19th century, and in 1906, 1929 and 1944. The last eruption destroyed the original railway.
The new project, to be completed in 2009, is to be financed mostly by the European Union.
Alessandro Crocetta, a spokesman for the regional transport authority, was relaxed about the apparent threat. He said: "Well, if it erupts, it erupts." The decision is all the more remarkable considering that only four years ago, the city council launched a £500 million compensation scheme to move villagers away from the volcano.
A law was passed forbidding further construction within 1.5 miles of Vesuvius, about five miles from Naples.
The 550,000 people who lived in houses inside the "red zone" were offered £20,000 towards the cost of a new house somewhere else.
Almost half of Herculaneum's population took the offer and abandoned their homes. The departure of locals left the way open for the Camorra, the local mafia, to move into their homes.
The area is now regarded as one of the most dangerous parts of the city as gangs wage a turf war.

However, the regional transport authority, headed by Ennio Cascetta, insists that the railway will help regenerate the area.
"It will have an effect on crime in the city, because the economy will improve," he said.
The funicular railway is part of a larger project to improve the underground system of Naples.
Lord Rogers, Sir Norman Foster, Anish Kapoor and Zaha Hadid are among the architects who have designed stations for the metro.
However, there are fears that the project may benefit the Camorra.
According to Italy's anti-mafia commission, 12 per cent of Italy's construction companies are tied to the mafia. A further 12 per cent of firms providing cement and building materials are run by organised crime syndicates.
In Naples, the local council has taken steps to award public contracts to non-Camorra companies. However, firms are suspected of either paying protection money or buying concrete from the gangs. The anti-mafia commission said the "entrepreneurial capacity" of the mob in the construction sector was growing fast and assisting their laundering of drug money.
Last week almost 100 gangsters were arrested in Nola, near the foot of Vesuvius, to investigate "links between local and national politicians and public contracts".
Meanwhile, at Herculaneum, where work is already beginning to restore Thomas Cook's original station, six people have been gunned down in the past week.
Nevertheless, Mr Cascetta said a railway line to the top of Vesuvius was "something romantic".

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So, any news since 2007??

You'll find a very nice Pavarotti recording here (click)