I don't know what Ced was talking about when he said that. I know they had been communicating around that time but not sure if they actually talked about doing an album. Knowing X he probably said he'd consider it if everything was legit. A lot of people ask him about doing an album or propose that he connect with this rapper or this label. This is how the rap game goes. People are always throwing around ideas and a small few pan out and become real projects.
One thing you have to understand about X is that he's loyal to his people. Ced held him down on many fronts for a long time. Beyond music, Ced wrote, visited, sent bread, etc. He still has a great appreciation for all that Ced did for him. They're like family in a way. For that reason, X chooses not to go to war.