A failed proposal is one for which a consensus to accept is not present after a reasonable amount of time, and seems unlikely to form, regardless of continuing discussion. References or links to this page must not describe it as "policy".
This tag is designed primarily to communicate status to other commons volunteers, and isn't intended to prohibit further development of ideas or proposals. It's probably not a good idea for those working on the proposal page itself to remove this tag unilaterally, but above all - remember that it's just a tag! - Be Mellow :-)