They've been working on the beta since last July, approximately, and increasingly fervently since about November when they released how hard it was going to be and with mounting pressure to release Froyo. So, it's not like they just started on the beta in Jan/Feb when the troubles started coming to public light. Also, evidence from LinkedIn suggests more than a few of their developers and testers left the company around January (I'm guessing 50%), so the costs would have gone down and progress slowed, but could have continued nonetheless.

Given the beta was almost done, why not polish it off a bit and at least send it out so that the customer base has something good in the end (not to mention it will help sell off the rest of the inventory)? I recall at least one person saying the iRex situation was basically the same (the company released a final version and then folded).