"it's relatively easy to adjust production tempo up or down for an in-production aircraft
No, it's not. To ramp-up production, one needs to inform suppliers, have the necessary manpower, have the production space available, etc. Boeing learned it's lesson a few years ago when they tried to do this with the 737, and failed miserably. In short, its not nearly as easy as you suggest. If customer X walks into your door and says, "I'd like to buy 50 of your aircraft, but I need them all tomorrow" your only response is going to be: "I'll sell you 50 aircraft, but you ain't getting them tomorrow." It's either that, or tell all your existing customers (who've already paid you money), "Sorry, but these guys are in a hurry, so I'm going to make you wait for your order(s)."
"but you can never recover a lost sale.
No, you can't. But there are some sales you were never going to be able to get, anyway. Also, we must remember that at the time that EK
made their decision to split the order, the -300ER had not finished flight testing, and the true potential of the aircraft was not completely known. At that time, the 777 and Airbus' proposal for the A340 were virtually identical. Why not try them both out?
Finally, just as an FYI - EK
has now committed to 20 A340-600HGWs, and 30 777-300ERs.
"this is the first time I've heard that Boeing is considering relocating final assembly elsewhere
They're not. Actually, that's not completely true - 777 FA
was just relocated one building down (the Everett plant is all one building, technically, but Boeing labels each bay a seperate building). This was to make way for 7E7 assembly.
Honor the warriors, not the war.