Jen,
I would create another table called "Status". In that table you can have at least two fields. One is the status itself, the other is the formatted text that you want to display for that status. Make the second a Rich Text field. This way you can format it anyway you want.
Relate the Status Table to the table you are working in (Status is the parent table). Replace your formula field in your question with a lookup of the Rich Text field from your status table.
With this solution you won't have to worry about figuring out the html and css required to format your text and you won't need to update your formula every time someone decides to change the wording of the statuses.
Hope this helps.
