One of the people working on it for Lunar is moving, so they're waiting for that to get settled. They did not drop the project.
For those of you interested: Ouran currently has 8 volumes out in Japan, with chapters released in LaLa every month (which I get, yay!)
It's only going to be 26 episodes, though, as they've already covered most of what's in the volumes released. Ep 20 just aired recently.
Personally, I like the manga more than the anime. I was slightly disappointed with the way the anime handles certain things, but I think it's because the anime is sort of meant to take a no-pairing sort of stance, while the manga definitely leans towards a particular pairing.
I like Tamaki x Haruhi, couplewise. I also love Mori. <3 The twins annoy me, for some reason. I just can't like them no matter how hard I try.