"Development was difficult because of differing viewpoints on how the project should be handled story-wise. Apparently the SMT team was possessive and difficult around the story, and the FE team was frustrated because it was being bossed around, which created tension and overall awkwardness."

This is due to both series having very different approaches to storytelling and conveyance. What is not being described in this article is that concensus is a give and take, push and shove. Both sides have a differing vision, it's not just one side wanting their way to prevail. The whole point of a crossover is to find the similarities.

Personally, I think most of those similarities in the two series are to be found in their earlier entries, especially Geneology of the Holy War and Thracia 776, and SMT 1&2. The tone of newer entries are so far apart from each other, though, that I'm not surprised if a concensus cannot be reached based on the newer titles, especially Awakening and Path of Radiance, and SMT 3&4.

The newer FE is very cheeky and cheery in it's conclusions, while SMT continues to be very dire. The older FE titles were also similarly dire in tone. If they're going to make this work, then the teams need to dig deeper, instead of using only the newer mentalities. They need to find the most despicable parts of humanity and showcase them for all to see, for both series' origins are rooted in this goal.

I don't think the project has necessarily been cancelled, but it's clear to see that no teams have been able to reach a concensus on how to bring the two universes together. It's very popular to bridge similar series in Japan, but sometimes, it just doesn't work out. If the integrity of either series would be lost in the transition, then it's better to leave it well enough alone instead of shoehorning them together.