Remind me when was the engine regs finalised ? All they were doing was probably an advanced research team toying with some concepts related to hybrid tech. Nothing special given the introduction of Kers in 2009. FErrari was of course doing the same and LDM should have kept it quiet to avoid ridiculing himself.
The most ridiculous thing is that probably Ferrari didn't even explore other technologies. Their own brand hybrids only came after the F1 Hybrid formula. I would argue that they even were inexperienced with modern Turbos.
They took pride on producing some of the most fabulous normally aspirated engines and just that. No forward thinking about new, better technologies.
Ferrari got truly caught with their pants down... for whatever reason, but I'm thinking either overconfidence or plain incompetence.
I'm not suprised Mercedes would have started working on Hybrid F1 PU's so early, though. That's what every engine maker should do, think forwards.