Hi Ana,
Sorry, I was writing from my cell phone and this is why the message was in one block. You summarized the situation right.
He replied to the email, and this time, saying it would be useless to send an application because of the "lack of progress" of my project. Of course I will not reply. I don't even want him to acknowledge that I've been doing a good job.
Anyways, the application was a four-page project for a fellowship application. Given that we have agreed on the changes to be made, I believe it wouldn't take him more than a couple of hours, problably much less, to read it and give me feedback. Now he decides not to do it anymore. And to justify it, he says he is too busy, then he says the project isn't good, then I didn't progress, then it woud take the whole Institute's time to review it while they have more important grants to review.
So yes, I will do myself a favor and find a better place to work.