My own take is that the administration is playing chicken with the Republicans in congress to avoid having to use a veto: "You guys had better not let this renewal get to my desk or I might just sign it and then we'll both have to take the heat." The President is also up for renewal in the fall of 2004 and I'm sure that he would rather not have to deal with this topic.
That's probably a good estimation of what is going on here. Back before the election, Bush was asked directly about the AW Ban sunset provision (it was one of those "one question for the candidate" forums). He clearly understands that signing a renewal of the AW Ban is pure political suicide and took the position that no such legislation should ever reach his desk. Given that early comment - and the fact that he got the Republican Congress that he wanted, it makes perfect sense that Bush is now making sure that Republican lawmakers know that he doesn't intend to go down alone.