Breaking Down Status Based On Hierarchy?

I want to show a third-level overview of how many to-do items are in various statuses (pending declined and completed) for the third level individuals.

In this example there's 2 regional leaders (level3), each with local leaders (level2) and individual team members (level1)

Status "1" is a new or pending to-do item
Status "2" is a declined item
Status "3" is a completed item

Here's what I want the output to look like (I may need to add columns for the final report but it should look as follows):

LEVEL3 | Status 1 | Status 1 | Status 2 | Status 3 |
LEADER | TOTAL | 2012 | TOTAL | TOTAL |
-------|----------|----------|----------|----------|
paul | 3 | 1 | 1 | 0 |
roger | 1 | 1 | 1 | 0 |

Here's some sample data similar to my live DB:

CREATE TABLE #items (id int, datestamp datetime, userid int, status int)
INSERT INTO #items (id,datestamp,userid,status) VALUES (1,'12/26/2011',1,1)
INSERT INTO #items (id,datestamp,userid,status) VALUES (2,'12/26/2011',2,1)
INSERT INTO #items (id,datestamp,userid,status) VALUES (3,'1/2/2012',4,1)
INSERT INTO #items (id,datestamp,userid,status) VALUES (4,'1/3/2012',1,2)

[Code] ....

I have a view called hierarchy that shows me the hierarchy for each level 1 user. Here's the source for the view:

SELECT
a.id 'level1',
b.id 'level2',
c.id 'level3'
FROM #users a
INNER JOIN #users b ON a.reportsto = b.id
INNER JOIN #users c ON b.reportsto = c.id

I've run into table/view limits when using a straight query and timeouts when trying to create a cursor that looks through all level3 users and populates a temporary table with an INSERT and multiple UPDATE statements to get the individual counts for each column for each user.

(Just a note on the actual database in case it's relevant: It has about 1000 LEVEL1 users, 50 Level2, and 15 Level 3 users. It will generate about 1400 to-do items per week.)