namkcuR
ONE love, blood, life
This is the problem I have with your timeline/reasoning:
I'm theorizing that the reason it wasn't released as a b-side was because the band felt it was strong enough to be on an album. For whatever reason, the direction No Line took meant that it didn't really fit anymore, so it was passed over again. Does anyone here think it would have made sense on that album? Maybe more than Stand Up Comedy or Crazy Tonight, but still.
They still were interested in the track, but because of the time passed knew it would eventually have to be re-recorded for any future endeavor. And then the tinkering began. I don't think this equates to "they weren't happy with it yet", but rather that the moment had passed (stylistically, thematically, whatever) for that version.
None of us should be shocked at the suggestion that the band spending too much time with something could lead to a negative result. They had a finished track, and should have left it as is. The nature of its recording, omission, leak, and resurfacing is as you said a strange one in the band's history, but not too difficult to understand given all the information.
You make a good point, that maybe they thought it was too good to be a b-side. But then, if you feel it's that good, but that you're not going to be making an album that it would make sense on, then just keep it in the vault and release it as a bonus track with something in the future. Or, even just release it stand-alone on iTunes.
The tinkering was unnecessary imo.
BTW, do you buy the common story about Bono accidentally giving the track away with a burned copy of HTDAAB before its release? Because I have a very hard time believing it. Though I really don't know the alternative would be as far as how the track got out.