My guess right now is that ASU will fold and give Obama an honorary degree after all. But that would not be the best result for Obama on the political/cultural stage. It would be much better if they stick to their guns and, if they do, here is Obama's smartest move:
He should sail silently and serenely past all the jabber. Maybe have Gibbs say that honorary degrees are the business of the University and the President respects that and looks forward to the commencement and is grateful for the opportunity to speak.
Maybe a crack about he already how has real degrees from Harvard and Columbia? That is so tempting but probably not a good idea. It plays into the elite thing--and he is in Arizona after all, you think that's an accident? Hook that up with the whole Notre Dame (i.e. Indiana) kerfuffle and you know it is no accident.
Anyway, when Obama gets to ASU he should begin with his patented, ironic, off-hand "how weird is this" smile and gesture--he does that so well--and then say: "I have a lot of reasons for wanting to complete a (pause) body of work (pause) during my presidency, and I feel them deeply every day. But I want to thank the university for providing me with an extra reason--the hope that one day I will be awarded an honorary degree from ASU. These are tough times (pause) and I need all the motivation I can get."
The kids would love it and the mavens on the stage would squirm, deliciously, helplessly. The opticals would be fabulous. And if Obama used the rest of the speech to call for a new kind of patriotism, an inclusive and generous kind of patriotism--it could turn into a classic moment.