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Don Cheadle is replacing Terrence Howard in the sequel, according to the Hollywood Reporter.
Cheadle, 43, will step in as Jim Rhodes, best friend to Downey's Tony Stark/Iron Man, who in the Iron Man comic books later becomes the armor-wearing hero War Machine.
Howard, who appeared in this summer's Iron Man, was reportedly replaced after negotiations fell apart over financial differences.
Iron Man stars Robert Downey Jr. and Gwyneth Paltrow are both expected back for the sequel, due out in summer 2010.
JOSH & FERGIE: ROCKED BY SCANDAL
Did he cheat with a stripper?
Married less than a year, the couple denies an Atlanta woman’s claims that she and Josh had a fling
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