I agree with your analysis. Nick Clegg did not like the decision to keep Hunt, but did not consider it an issue important enough to bring down the government. Therefore the party went for the symbolic gesture of abstention rather than backing the Labour motion (which would also have been a symbolic gesture, as I believe the motion before the House even if passed would not compel the setting up of an enquiry on Hunt).

The next step, if the motion had been passed, would have been a formal motion of no confidence. If that was passed, then that motion would have real effect and might lead to an early general election; if a new government could not gain the support of the House in 14 days. The coalition would presumably have defeated such a no confidence motion, but the friction between the coalition parties would have been greater if there had been a Lib Dem vote against the first motion rather than the abstention.

Clegg's position makes reasonable sense, from the point of view of parliamentary manouvres, but I doubt the general public will understand. The Labour Party will certainly treat all this as more ammunition for its attacks, as will ill-disposed Conservative backbenchers. It is in the self interest of both groups to return British politics to a more traditional two party system.