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I belive this was done by Disney as an animated film for Touchstone or Dimension I can't remember which but I know it would be more adult.
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What I recall is that Disney bought the distribution rights after production had begun. For whatever reason, everything fell apart pretty quickly and the director, Kevin Altieri, had to basically spend most of the decade finishing the movie by himself, which might explain why the quality is allegedly not good.
I did notice that Altieri directed the first Stripperella episode, so at least he's working on other stuff now. Hopefully he'll get back on track since he was one of the best directors the original Batman cartoon had.