"this patent app is in big trouble."

I don't know about big trouble, they have ventured a fix. That in their opinion makes the issues patentable.

If the examiner does not agree with the changes, he will issue yet another 25 page non-final with explanations.

The applicants will come up with yet another angle to the problem and respond.

IMO, they have their work cut out for them in avoiding a "Final" rejection.

In any event, they are pursuing and not ideally abandoning it as it seemed.

doni