If you come from outside and go through Phases I and II and don't make it through the interview (or past those Phases), then you have several options. Most people who haven't made it are pretty bitter, so they tend to get the hell out asap. They have the option of going wherever and doing whatever they want. Most of them aren't happy because Phase I and II cost $5000.
They could also stick around, take a CFI course and become an instructor, then interview to become an instructor with FSI. I believe that these people would still qualify for the free CFII and CMEI if they commit to 800 hrs dual given (but I'm not positive - you'd have to call and ask). In that case, they'd most likely have another shot at interviewing with ASA, and would also build the necessary time to interview with other regionals.
It seems to me that if you were selected for Phases III and IV, you will have little trouble in Phase III. At the end of Phase IV, there is a checkride in the Saab 2000 level D (full-motion) sim. If you don't pass the checkride, you are SOL. At that point, you will have spent $25000-30000. Your options are the same as above, but your wallet is SIGNIFICANTLY lighter. There are no guarantees in the program, so it's highly recommended to be VERY motivated to learn what is taught and do your absolute best.
You can always update your hours - you should regularly update your resume with hours, ratings, etc.
Honestly, the number of hours don't matter so much - this is a low-time program. I assume you will be coming here with a Multi-engine commercial rating with instrument privileges.
If so, you will do Phases I and II, which are essentially an evaluation of your commercial and instrument skills. Phases III and IV are where you get training in ASA's way of doing things - checklists, callouts, advanced systems, etc.
If not, then you will need to get it here or elsewhere, before applying to the program. One great advantage to this program, that no other (that I'm aware of) can match is that you WILL interview with ASA, provided you get through Phases I and II (or get your ratings here).
If you need information sent to you, call FSI and ask to speak to Stephanie in Marketing. She should be able to get it expedited to you.
About the application, if I sent my application in say June of this year, and I select the October class. What if I fly most of the summer and have more hours than what was originally on my application, will those still count or do they go by what you put on your application. I know I'm asking alot of questions and I am very grateful for your help and your informative responses. I really want this bad and I want to make sure I'm on the right track. I asked for information through the mail 8 days ago and have not recieved it yet, but the responses I have gotten on here are just as good as the info they send me. Thanks again!!