It makes sense for Apple to seek liberation from Google's chokehold on Maps, and to make plans to deploy this when it was ready. So, out of his extremely malformed recounting of Apple's available options, choice #3 is the best in the long term, but it's not the best choice right now, when Apple's in-house version is leading people down dead-ends into wooded areas when they're almost out of gas (http://theamazingios6maps.tumblr.com/post/31930446388/neithe...) and doing similarly perilous things all the time. This should be blatantly obvious to everyone.
iPhone would continue to thrive even with less featureful maps support. The addition of Latitude would not be an invasion of privacy as Gruber suggests, because it's off by default and in fact when I try to enable Latitude (on road trips, so family can track progress) I typically have a hard time finding it. While neither option 1 nor option 2 is ideal for Apple, both were plausible, reasonable solutions until their in-house maps solution was ready. This, again, should be obvious.
It is immensely irresponsible to rip out something as critical and relied upon, not just for convenience but for safety, as Maps and replace it with a half-baked, disastrously incomplete lookalike. I totally sympathize with Apple wanting out of Google's grip, but we need to be serious here. They released far, far too early, and their draconian and self-serving policies for App Store inclusion have left customers (in some cases literally) stranded.
Apple did a bad thing with this maps release. I would call Google right up and strike a deal to push an OTA update that put the old maps back right away if I were them.