Getting and keeping a medical can require a lot of tenacity. You are now in the world of "Special Issuance". Don't give up, you should be able to get your medical but as you have found out it will take some work. You should look into joining AOPA as they offer many services that will be helpful including more info on getting and keeping your medical.
Sport pilot licence may also be an option to for you. Lots of information on the web about this area of aviation, but in a nutshell a sport pilot licence allows you to fly very small aircraft with specified conditions without a medical certificate.
Don't give up this easily!!
I second bluetoysguy, join AOPA. They are great to lean on for all sorts of aviation things. Special Issuance is a slippery slope. If special issuance is denied sport pilot is no longer an option.
Elf,
Since you are not giving up and I agree you should not, take this time to keep the training going. One of the common mistakes in flight training is the thought that you need to do all the training in the airplane. Of course there is required time in the air but some of the best education you can get toward flying should and can be done on the ground. Flying is the fun part but the most fun part is becoming a pilot. Use the airplane to practice and apply what has already been learned on the ground through practical ground instruction. The airplane is a terrible classroom, there's far too much going on. Not to mention the airplane is the most expensive part of your education.
This time off would be a great opportunity to focus on the written test and get this completed. I understand you already completed some ground schooling. There are many options available to assist with this. Textbooks, online, ground with your instructor etc. The test results are good for 24 calendar months. I would also recommend that since you will not be flying weekly, start an account and put that money you would be using for flying in it. This way when the medical does come through you will have built up a training fund which will allow you to train more than 1 hour per week. With all the varibles involved in flight training including your availability, aircraft availability, instructor availability, weather, money etc. one hour a week makes progress very difficult. You will find each lesson being a repeat of the last.
Be patient with the medical, nothing happens fast with the FAA. Feel free to shoot me a PM with your mailing and email address. I'll get you set up with an online program, textbook and AOPA Flight Training Magazine.