The thing Oracle was suing over is the thing you have to have in order to run any Java code at all. And most of Android's API surface is built in Java - including the APIs Oracle was suing over. Those can't be removed, and if you try, you're going to split the ecosystem ala Python 3.x. Android can't work without Java.
This, BTW, is why the entire FOSS world was shitting itself over the Oracle lawsuit. If they were to win, it'd trigger a cascade of other companies claiming interface copyright over every competing OS and library that has a similar interface but is not entirely a compatible reimplementation[0]. The problem is that programmers thought interfaces weren't copyrightable and thus have been doing the whole "embrace and extend" dance for decades. Think less WINE and more GNU: something that's very explicitly Not UNIX, is sorta-kinda compatible enough with it, but also has a lot of its own weird extensions. That's what Oracle thought shouldn't be allowed.
Fuschia replaces things lower level than the Java APIs - things Oracle doesn't own. That's the Linux kernel and a good chunk of Android userland[1]. If, say, SCO were to somehow come back from the dead with some new bullshit legal claim to the Linux kernel, then yeah, Fuschia could get Google out of that kind of a jam. But that isn't the case right now.
[0] Existing Ninth Circuit[2] precedent regarding, of all things, PS1 emulation, precludes suing over compatible reimplementations of existing interfaces. The problem with Android was that it wasn't compatible; they'd taken some but not all of the Java APIs, which was against Sun policy. Sun didn't want partial implementations or extensions in the wild. In fact, Sun had already successfully sued and won against Microsoft for shipping MSJVM with COM bindings.
[1] Which, funnily enough, contains no GNU code so you can't call it GNU/Android.
[2] Yes, the lawsuit was in the Federal Circuit, not the Ninth Circuit.
Basically Google has the resources to write their own OS and their own alternative to Java, so they did so as an escape hatch.
And Fuschia+Dart+Flutter runs perfectly fine. There's nothing wrong with them.
Should Google keep pouring money into them? YES. Absolutely yes. But do they need 500+ people on each project? Probably not.
Remember Google has on the order of 100,000 software engineers.
This, BTW, is why the entire FOSS world was shitting itself over the Oracle lawsuit. If they were to win, it'd trigger a cascade of other companies claiming interface copyright over every competing OS and library that has a similar interface but is not entirely a compatible reimplementation[0]. The problem is that programmers thought interfaces weren't copyrightable and thus have been doing the whole "embrace and extend" dance for decades. Think less WINE and more GNU: something that's very explicitly Not UNIX, is sorta-kinda compatible enough with it, but also has a lot of its own weird extensions. That's what Oracle thought shouldn't be allowed.
Fuschia replaces things lower level than the Java APIs - things Oracle doesn't own. That's the Linux kernel and a good chunk of Android userland[1]. If, say, SCO were to somehow come back from the dead with some new bullshit legal claim to the Linux kernel, then yeah, Fuschia could get Google out of that kind of a jam. But that isn't the case right now.
[0] Existing Ninth Circuit[2] precedent regarding, of all things, PS1 emulation, precludes suing over compatible reimplementations of existing interfaces. The problem with Android was that it wasn't compatible; they'd taken some but not all of the Java APIs, which was against Sun policy. Sun didn't want partial implementations or extensions in the wild. In fact, Sun had already successfully sued and won against Microsoft for shipping MSJVM with COM bindings.
[1] Which, funnily enough, contains no GNU code so you can't call it GNU/Android.
[2] Yes, the lawsuit was in the Federal Circuit, not the Ninth Circuit.