What I find so incredibly frustrating is that the piece sounds like it's fictionalized (I would probably call it a fictionalized account of a trip to China). Even while I was thinking "it doesn't seem possible that he did all this, met all these people, had all these experiences in a six-day-long trip," I was moved by the piece.
To me, the whole point of emotional truth is that we react to it as though it's true even when we know it might not have strictly happened that way. There are all kinds of "non-fiction" that function on that level (many popular histories, for instance, weave documented history with imagined conversations). What makes them acceptable (to me, at least) is that they admit to having been "touched up," one way or another - either through saying "we don't know exactly what happened, but here's something that's plausible given what else we know" or by using a label that indicates something other than strict reporting.
I don't know why TAL chose to adhere to the highest journalistic standards for this piece - they certainly have aired episodes that sounded "true" but were either dramatized or were straight-up fiction - but it was a mistake for them, and incredibly dishonest of Daisey to have allowed it to run as such (not to mention the numerous direct lies he apparently told during fact-checking). What I imagine happened is that his monologue left it a little bit open - he said these things had actually happened, but within that context, the audience could have come away wondering how much was truth without it being a major problem (as Ira Glass apparently did). And then Glass contacted Daisey to ask him to be on the show, and Daisey made a quick decision not to muddy the waters by admitting that some bits were fabricated. And then he kept lying to support his original story.
All along the way, he could have stopped and admitted what was going on, but he kept digging himself in deeper. His "apology" on TAL seems like more of that, rather than an actual admission that he lied. If his biggest regret was truly having the piece on TAL, then all he's saying is that he's sorry he got caught.
[sorry, Paul - I should probably just make my own posts about these things... you seem to write about topics on which I want to rant!]