I'll put it this way:
It looks like there is slightly over a second there from snap to throw.
It is only a fraction of a second from Schaub coming out of the play-action to seeing Chancellor in his face.
Laying down would have had to have been a pre-planned response to make that move; the human-mind just isn't going to move quick enough to make that decision there.
That being the case, he's either going to throw it to his primary receiver (and the only spot he had an opportunity to throw it, in this case), throw it away for intentional grounding (and that probably ends the same way, since the ball would likely have ended up in near the same place), take a big-hit sack or try to evade.
This is Matt Schaub, so the last option is obviously out (it would have had to have been Wilson, Kaepernick, Pryor, Newtorn and maybe RGIII for that to have been an option). The Mannings, Brees' & Brady's of the world are probably savy enough to cover the ball well enough as they get hammered, but even they may have thrown it. Of the 1st two options, Option 1 is probably better, since his TE should at least have been able to play a little defense there (not sure if you noticed, but Daniels didn't make much of an effort there), and might have actually fought for the ball and had a shot at the 1st down.