I honestly don't think they anticipated an AO rating. Besides it being a rating rarely given out, it's got to be prohibitively expensive to edit a finished game, and I seriously doubt this is a case of one or two objectionable scenes. I'm sure they planned on "controversial" free publicity upon release, but this is expensive and embarrassing for a company still wiping the egg off its face over the Hot Coffee mess. Additionally, there's really no evidence this kind of extreme shock factor controversy has ever translated into game sales.
I have a hunch this game is never coming out, not because Take Two won't try, but because the ESRB may refuse to give it an M rating until it's edited within an inch of its life. For them, this is a slam-dunk test case to prove they have the leverage to police the industry. It's a highly objectionable game from a company already on the shit list, and it's not like this is GTA 4 or anything. Who's going to vocally defend Manhunt 2?
For what it's worth, though, the AO rating and ban is exactly what Jack Thompson doesn't want. How is he going to win a gigantic lawsuit and make an assload of money if the industry polices itself effectively?