That sounds a lot like the very sucky situation my best friend was in for awhile. Definitely took a toll on him at the time.
That also might explain why the fan film was so... angry... and sadistic... and... evillll..... O_O
Reading the storyboarded movie temporarily ruined SatAM for me, and I think the quite-bothersome portrayal of Sonic and Sally's relationship turned me off the whole Sonally thing for good.
So for the sake of SatAM (and, to a lesser extent, The Secret of NIMH), I think it's for the best you didn't get the funding...
Sorry, lol, no hard feelings! It's cool to hear from you again. Just needed to get that off my chest, as of a couple years ago, lol...
EDIT: ... I feel bad now. It's clear you (and the other artists) put a lot of blood, sweat, and tears into the storyboard. Some of the shaded pencil drawings are quite beautiful, which gave certain parts a really epic feel. Plus, you attempted something I never have, namely, writing a feature-length story, an incredibly daunting task to me.
I guess, ultimately, here's what it came down to. Back in the day, I was really excited about the project, the idea of a SatAM movie. But as I read it, I felt it expressed a negative way of seeing things that I strongly disagree with on a philosophical level. It was scary to see one of my favorite childhood series turned around against me... In retrospect, I suppose the fact that I took it so seriously proves that it was an immersive experience, which is impressive considering it was only a PDF of storyboards, lol...