Not true.
see:
http://database.aura-astronomy.org/nv/hst_vs_ao_2.pdf
AO does seem like too good of a thing to be true. I myself had a hard time believing that any technique could be devised that would remove the advantage the HST has over any optical device that has to peer through many miles of atmosphere. The fact that AO is limited to infrared alone greatly limits its usefulness, and is a limitation I wasn't aware of until now.
I've always been a great fan of the Hubble. I consider it a program of money well spent, and we need to continue to advance our capabilities in the area of telescopy.
Thanks again!