If the code is good enough to go in production devices, why isn't it good enough to be released to the public?
It's quite easy to create a code base that mostly works well, but whose structure and organization is utterly unsuitable for a public release. This is especially true when you have a marketing-driven deadline (e.g. "ship before the iPad 2") and have to take shortcuts.
The quote from Savoia and Copeland in the article seems to be saying that Google won't release the code until the product sees market in order to maintain their competitive advantage. That's one thing. But when they continue to sit on the code when the product is out, that's another thing entirely.
They have said it's not suitable for phones, apparently Honeycomb and Gingerbread were divergent forks that need to be merged rather than simply building on top of each other linearly.
To me it looks like they chose to be a little protective of their ideas, features etc in honeycomb. Nothing necessarily bad with it. AAPL and MSFT do it all the time but what is sad is that they do it while posing as a good citizen in open source world.
Does that decision benefit their partners and hurt others? Yes. And if you want to argue holding the code back was a business move and not a quality issue, that's fair, but it's the one card they can play to ensure high-quality devices in the market.
As an Android user, I say let them keep it.