On Sunday, Lynch sent out several Tweets to break the news:
"Dear Twitter Friends, Showtime did not pull the plug on ‘Twin Peaks'. After 1 year and 4 months of negotiations, I left because not enough money was offered to do the script the way I felt it needed to be done. This weekend I started to call actors to let them know I would not be directing. 'Twin Peaks’ may still be very much alive at Showtime. I love the world of Twin Peaks and wish things could have worked out differently.”
"We were saddened to read David Lynch’s statement today since we believed we were working towards solutions with David and his reps on the few remaining deal points. Showtime also loves the world of ‘Twin Peaks’ and we continue to hold out hope that we can bring it back in all its glory with both of its extraordinary creators, David Lynch and Mark Frost, at its helm.”
So it could be that Lynch used the nuclear option to push Showtime into acceding to his contractual needs. But Showtime may hold fast and press on without his further involvement. According to the Variety article, the scripts for the 'Twin Peaks' revival are already written by Lynch and co-creator Mark Frost. And there was no mention of Frost's stance on the situation.
The fact that Lynch contacted the actors is troubling, because he may have done more than just let them know he was off the project. But Showtime announced back in January that Kyle MacLachlan was coming back to play FBI Agent Dale Cooper, so he might already have signed a contact.
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Some of the actors from the original series have since died, including Jack Nance and Dan O'Herlihy, but I would think many of the others would leap at the chance to reprise their roles. Haven't seen much of Michael Ontkean lately, and Daphne Ashbrook can't be filling up all her time with 'Doctor Who' conventions. Many of the actors were willing to appear in the 'Psych' homage episode "Dual Spires" so they might still come back for this project with or without David Lynch.
I hope it can still proceed and still be on the air sometime next year, if only to fulfill the prophecy made by Laura Palmer in the Red Lodge: