I could be wrong about this, but during the transition I seem to remember reading that "Powerbook" was legally tied to Motorola because of the "Power PC" despite the fact that early PBs did not have PPC chips. I think the plans were laid in advance on that one. So when Apple decided to make the switch they legally had to give up the name "Powerbook" and since they were giving up that, they also gave up "iBook" because one didn't make sense without the other, even though they would continue using iMac.
My guess is that there was months of legal wrangling to keep the name and so this prototype was made before the final decision was made.
I also think the whole "we decided to take "Power" out and put "Mac" in was just spin, good spin, but spin nonetheless.
Great find though. I would definitely lock that one up for a rainy day.