Dennis McCauley, a writer for GamePolitics and the Philadelphia Inquirer, has a good column over at Joystiq which summarizes the AO rating and banning of Manhunt 2.
On another note, I talked to the manager at a Game Crazy who said that they wouldn't carry the AO rated title. That means that no major retailer and Gamestop and Game Crazy won't sell it, effectively banning it in the US.
I'm sure Rockstar will edit the content to make it an "M". Or, wouldn't this be interesting, retool the game for the next-gens and make it digital download only via Xbox Live, the PSN, and the Wii Shop.