There are a lot of stages to approvals - for instance, sculpts go through at least 5 rounds of studio approvals before production, and it can be more, especially if talent is directly involved, or change their mind - eg, Bakula wanted to change Archer's hair to a season 4 hairstyle right towards the end of the cycle.
At any stage, it can be sent back, either for large wholesale changes (eg a brand new sculpt from scratch) or minor adjustments, but it will need to go through each stage of approval again. But not being approved certainly doesn't mean cancelled or anything, it just means it will continue development until it does meet whatever is required to get that approval, which in some cases is quite subjective especially if the actors are involved.
In regards to the five-year limitation, Nanjn recently mentioned that Paramount would likely want EXO-6 to continue beyond that time, so all this worry might be for naught. We shall see!