Jeff Lomonaco saw the logic weeks ago:
It is precisely out of the desire to avoid such uncomfortable questions for himself and his vice president that President Bush is likely not to pardon Libby but to commute his sentence, or otherwise keep him out of prison without fully clearing him. That would enable Libby to remain free while he seeks legal vindication through the appeals process. But more importantly, it would enable Bush and Cheney to continue the strategy they have successfully pursued in deterring journalists seeking their explanations with claims that they shouldn't comment on an ongoing legal proceeding. If Bush were to pardon Libby, he and Cheney would no longer have such a rationale for evading the press' questions - nor would Libby be able to claim the right against self-incrimination to resist testifying before Congress about the role that Cheney and Bush played in directing his conduct.
But if Bush simply commutes Libby's prison sentence without effectively vacating Libby's conviction, the appeals process goes forward and Bush and Cheney continue to have their rationale for not answering the press' questions. This strategy would also have the added benefit for Bush of eliminating the chance, however remote, that under the pressure of prison time away from his family and abandoned by the White House he served loyally, Libby himself would tell the true story of his own and others' conduct.