Now were they just bold in the beginning, knowing how it would be received and hoping for some notoriety, or were they really that clueless? I believe the former.

Most likely the former. I remember a similar instance from a couple of years ago: a series of ads for Aspercreme (a tube of stuff that you rub into your skin to relieve muscle pains and aches). Each rapid-fire ad presented someone in pain who questioned whether he or she could find relief. A disembodied chorus of men then sang: "You bet your sweet Aspercreme!"

And just in case the listener didn't get the joke from the lyric, it was emphasized in the melody (so so so so SO ti do), where the syllable "ass" was the highest note, an octave higher than "you bet your sweet".

These ads ran on TV and, as I recall, on radio for several weeks until the company received enough complaints about the crudeness of the jingle that it was changed to "you bet if it's Aspercreme". The melody, however, was not changed, so the focus was still on the "ass" (the ass who wrote the jingle, that is!). Made it sound like a hemorrhoid ointment.