The short answer would be that yes, the project is still alive. Even more, they’re still planning to start an open beta of OnLive by the end of summer (which, in Earth terms, would mean “by the end of August”, but in developer terms might actually mean “by the end of October 2011”). We’ll see for ourselves, anyway!
However, don’t expect to see the full OnLive launched by the end of the year – according to Big Download, a company rep said that the launch will be decided by the feedback the beta will generate.