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The "plan" is to take out the contaminated code and rewrite it.

If the rights holder is particularly litigious then I could see them suing even if you agreed to take out their code under the argument that you've distributed it and profited from it. I don't know if there's been any cases of this historically but I'd be surprised if there hasn't been.

Every open source project has the possibility of litigation. Can't always live in fear of the bogeyman

The same issue is present with the use of LLMs. Are you absolutely sure it didn't just repeat some copyrighted code at you?

Partly why they have CLAs I suppose?

If someone sells me something they stole, I'm not on the hook for the theft.