You forget it was the same strategy Steve Jobs followed with the development of the original iPhone, where one was the current realisation and the other was based on the iPod.
I actually think making multiple prototypes is a good thing, it helps you understand things from more angles and see more possibilities about how a problem can be solved. But going and releasing both is confusing to customers and ultimately fragments your product line-up (canibalizing your sales) which is something Apple is desperate to avoid.
I think both Jobs' biographies detailed Forstall & Fadell's development, but I thought they knew about each other, working on Mac to Phone & iPod to Phone concepts respectively.