Over at Animation Nation, a person stated that Snow Queen has been recently been "in and out of development.

Disney Working on 8 CG Movies!
Source: Laughingplace.com
June 8, 2003

Michael Eisner revealed in a recent presentation that Disney currently has eight computer-generated movies in production (which may be My Peoples, Chicken Little, Fantasia 2006, The Snow Queen, Rapunzel, Fraidy Cat, Vanguard's Valiant and Rocket Pictures' Gnomeo & Juliet).

New Animation Chief Redraws Rules at Disney
Los Angeles Times
April 29, 2003

On Monday, the new boss roiled the ranks when he told a gathering of 525 animation employees that he wants them to produce lush, classic fairy tales -- perhaps "The Snow Queen" or "Rapunzel" -- entirely on computers. His vision was greeted with dropped jaws by the roomful of artists steeped in the traditional style of hand-drawn animation pioneered by Disney.

May 19, 2002

The verdict is finally in for Snow Queen, another project that’s laboring to find a logical, stylistic way to blend 2-D and 3-D animation: Disney’s latest attempt to turn Hans Christian Anderson’s icy tale into a full length animated feature didn’t turn out so hot. So -- even though temporary tracks had already been recorded for the work-in-progress reel for the studio’s latest stab at The Snow Queen (with Corey Burton providing many of the vocals ). Disney execs have reportedly pulled the plug on this version of The Snow Queen. And WDFA’s story staff is already hard at work, boarding a brand new take on the same material." "Master animator Glen Keane took advantage of this break in The Snow Queen's development to announce that he was leaving the project. After decades of doing stellar work on other people’s pictures, Keane has finally decided that he wants to direct a feature of his very own. So Glen is now supposedly holed up in his garret at the Disney lot, where he’s trying to come with a feature length story line for a film that's based on Rapunzel.

March 22, 2002 from a inside Disney animator

It has been reported that acclaimed animator Glen Keane, best known as the man who initially brought Disney's Ariel, the Beast, Aladdin, Pocahontas and Tarzan to life, last week was was found out that Glen Keane's next assignment will be as a lead animator for a yet-un-named central character on Disney's "Snow Queen.", which will be entirely done in CGI format.

March 18, 2002 from a inside Disney animator

Glean Keane is currently storyboardind on Snow Queen and, amazingly, using a pen! (Glen's had quite a visceral relationship with graphite.)

From February 28, 2002 Feature Animated Forum

The executives want the production in Snow queen to be CG with a traditional "painterly" look, kind of the same way as the Fantasia 2000 segment in "the Tin Soldier" (CG characteres, painted backgrounds)but this time taking full advantage of the deep canvas process.

"I've begun working on 'scratch' tracks for Disney's Snow Queen (set for completion in about 4 to 5 years), but I never know what may come up for me in this constantly surprising occupation."

It has been rumored that the Brizzi Brothers were working going to work on it after Don Quixote. But since the Brizzi Brothers left Disney the status of this film is unknown.