We're told Vince McMahon had a discussion with CM Punk on Tuesday that was "very one-sided." Vince basically told Punk he isn't working for three weeks and they'll see how he feels after that. He was insistent they weren't going to blowup the proposed Royal Rumble main event against The Rock for a B-level pay-per-view.
Punk is reportedly doing "really well" and while normal recovery time for arthroscopic knee surgery is 4-6 weeks, there have been athletes that are back in their respective sports in 1-2 weeks. One observer said the fact of the matter is Vince isn't risking it, especially in a TLC match against an opponent [Ryback] that isn't exactly known for protecting people.
In the long run the injury eliminates another difficult creative situation of Ryback losing again and sets up a restart of the feud for later. It's considered highly unlikely that Punk wouldn't be able to work Royal Rumble but if he couldn't go, they would likely go with Rock vs. John Cena to fit in everything else later. This would also likely setup Cena as interim champion.
As for the replacement match at WWE TLC, Vince wanted a TLC match on the show so they are going with the TLC match with the added pin or submission stipulation. We're told a lot of people feel this is lazing booking and lacks logic.