Google were fine with Astoria, they had to be or it would never of come into existence.
What wasn't fine was app developers leaking the tool, someone figuring out how to abuse it, and then everyone else using it to install pirated Android apps onto their phones.
Astoria stood a chance of helping to reduce the app gap and get more apps legally ported to Windows Phone. It was killed by people who couldn't wait and didn't care about respecting usage rights. Shame really.