Bush said he would sign the AWB if it came to his desk as well. I think you are correct, he is just playing politics. I will sleep with one eye open on this issue.
I think he is probably just pandering to the Democrats and since he won't be in a position to propose or vote for legislation, I can't see any reason to get my panties in a wad over his appointment. Besides, after the Democrats finish with a Republican A.G., his chances are somewhere between zilch and none to get confirmed to any court which suits me just fine as far as Gonzales is concerned.