Security from people suing you is probably the most compelling reason you gave here - I see no reason why Google would want to control Java IP and future direction when they can write all the software they need to in house to built on the Java platform to meet their needs.
So is 5-7 billion worth security for people suing you? I guess we'll see, but this is likely the biggest lawsuit related to Java they will ever face, and you can bet they won't make this same mistake again. Unless then pay out several billion dollars, which is unlikely given the tendency of these large technology firms to cross sue and settle with cross licensing agreements, I'd say Google's decision not be buy Sun is still sound at this time.
Just my two cents, I am watching just like the next person from the sidelines, this should be interesting.