Does it deserve cult status?

"Cult film" is something with a definition, not a badge of honor to be earned. Grease 2 was unpopular on it's release then developed an underground following, which is what defines the term. "Deserved" just isn't really a relevant term to user here.

When you're 17 a cow can seem dangerous and forbidden...am I alone here?

Yes. This is a classic, I don't care what anyone says.

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Xanadu has cult status in a way. In my opinion that was the worst move ever made. If that can get it, I guess Grease 2 can.

Yes! Our cult leader loves it and makes us watch it monthly as we pray.