IMO wrangling out a deal with the french was always going to be non-linear. Issues with the French build were well known before and during the process. This isn't surprising new information, and I would imagine was well addressed before the decision was made. Not just the french issues, the Brazillian ones too.
While the Japanese aren't used to running big international defence projects, Americans are. If the French continue to become difficult the Japanese have openly expressed a willingness politically to work on something, and the Americans could always be the great enabler.
The more painful the French are, the more it might drive other options. A combined Japanese/American bid, that is a more extensive change of the Japanese design would be a wholly new proposal, and could be quite competitive. The selection process I think highlighted, very quietly to the Japanese some of the design and function issues they might want to address for international sales or even for near term future development.
For example, going from a regular and very traditional optical periscope to a full phontics mast. US has tech, Japanese would also obviously also be able to develop something that could perhaps be incorporated in other allied designs (US, UK, AU). The Japanese certainly have extensive experience and capability in this area, and really there was previously no impetus to get entities to work together. That might change. Other customers, other opportunities.
So the more belligerent the french are in negotiations, the more other options will be facilitated. Not just for Australia, but for the wider defence market, which the French compete in.
Japan hasn't been standing still, they have supercharged their submarine program, which operates a much larger fleet of subs than France, and have really doubled down in the future on increasing their technological edge over adversaries. Losing the selection might be the best thing to happen to Japans defense industry as they will start heavily bench-marking not just production but capability, and look at adapting capability for a different Japan than what exists now or in the past.
The French have been plodding a long being very French.
Remember this is the organisation who boldly told the world they had won not just the selection, but for eternity, and started making lowball offers to buy the competing German company for cents on the dollar. The French have a very complex view of themselves and their tech. There is a lot of ground between the two negotiating parties.
Australia choosing not to go forward with the French would be a terrible blow to them. Credibility would be tremendously eroded, particularly in the light of recent events.