Over at PWInsider, they have a pretty in depth report on the injury status of Rey Mysterio.
While it is believed that the injury is some kind of bicep tear, the severity of the injury is still not known. The report they published does state that he does still have movement in his arm, more movement that is normally associated with a full tear so it might not be as bad as first thought. He as examined this week by doctors, so the full extent of the injury will be revealed soon.
One of the most interesting things about this is that while this injury could not have come at a worse time for him. It has not put a stop to the negotiations he has been having with the WWE. So there is clearly still interest there. Of course, if the interest is in him coming back in and actually performing full/part time or just some kind of merchandise deal we do not know yet.