A professor I want to work with (at the university I applied to) informed that he is awaiting some funding news (for a project I had expressed interest in working with him on) and he also stated that he has highlighted my name to the fellowship committee. Any idea what that means? Is that a positive development with regards to me getting an admit/fellowship?
It is positive certainly, but not definitive. It is just a progress report sent as a courtesy. He is being encouraging, but not making any commitments.
Of course, you need to go through the normal admissions process. This isn't a substitute for any formal procedures that are required. In US institutions admissions is handled by the university, not the individual professor. Funding may be under his control, however.