the reason starting AO in the first place was to enable them to start again with new labour contracts and hence lower opperating costs.
Then they took that the next step with JQ. If they went expanded AO's services they would have to do so under AO's existing contract limitations. By starting JQ International, they can start again with labour contracts and conditions and have a lower cost base than they could with expanding AO.
It not just about using a name, but about using the name that permits them to achieve the lowest cost base.
Even though we hear lots of horror stories from Jetstar passengers, I think they achieved the goal of being perceived by the Australian public as the lowest fare airline. And many people will just bok them because they perceive them to be the cheapest and are willing to take a risk on the service front.