Apparently the committee that decides such things met yesterday and decided to allow "Falling Slowly" to remain in contention.
Apparently the investigation was twofold: one, was the song written for the movie. It was.
But the second issue what that it was several years between the writing of the song and the making of the movie and in the intervening years it had been performed publicly several times. Apparently someone thought that might be enough to disqualify it and raised a red flag. The decision was that these performances were inconsequential.
Fuller details
here. I'm surprised that this was re-raised so late because I thought it had all been settled after a similar review before nominating ballots were sent out.