Since there has been no official confirmation of the rumour, it is still just that: a rumour. However, the same has not been officially denied. Apparently, allu arjun and atlee did meet up a few times to discuss working on a project together. However, the director is claimed to have recently told bunny about the cameo role and is currently awaiting his approval for the same.
Similar to how salman Khan's cameo in Pathaan set the screen on fire, Allu Arjun's cameo in jawaan is likely to do the same in South India. Fans are expecting that this cameo rumour would materialise, although Allu Arjun's management hasn't made a formal statement about it at the earliest possible to confirm everything.