The fallout from Disney cutting its animation division continues with Jim Hill Media reporting today that "Lilo & Stitch" director Chris Sanders has been forced off of "American Dog".

Scheduled for a summer 2008 release, Dog is a CG animated comedy about a dog named Henry, a famous TV star, who one day finds himself stranded in the Nevada desert with a testy, one-eyed cat and an oversized, radioactive rabbit who are themselves searching for new homes. He thinks he is on television when this takes place.

The reason for the pull seems to be that Disney, or more importantly Pixar's John Lasseter & Ed Catmull, now don't want to be in competition with its own division.

As a result, they want next March's "Meet the Robinsons" to be the last CG-animated feature that what's left of the Disney feature animation department will release. From now on their plan is for the division to be doing traditional animation, whilst Pixar will do all the computer animated efforts.

What this means for "Dog" is unknown as Sanders deliberately designed that film to be a CG feature. The other factor is that Disney's new CEO Bob Iger isn't as keen on just cutting back on non-Pixar CG projects just yet and will wait to see how story reels on "The Frog Princess" and the box-office of next year's "Enchanted" does before making a decision.

The news is both good and bad, on the one hand it sucks for Sanders and those with CG projects in the works at Disney. On the other it does mean Disney is returning to traditional animated features much earlier than expected.