The problem for the EU is as follows:
- A no deal, no extension strategy makes sense; let the UK fall apart for a few months, then ram the initial withdrawal agreement with a few wording changes down their throats knowing they don't have much choice but to accept or fall apart further.
- However this strategy precludes a tory GE loss [whilst almost guaranteeing one], and a referendum to remain, which would be far preferable to all. Which would happen if the strategy was followed, as no deal impact during a campaigning period would possibly kill the tories, the lib dem and brexit party vote would be in tatter.
Which leads to the practical considerations of either allowing no deal and installing Corbyn, who may well fast track some sort of Norway+ agreement to end the chaos, or extending and hoping that the tories lose and we can get another referendum.