Its not that AMD let Intel do anything. Intel just did it. Intel made a mistake with the P4 achitecture, now they've corrected it with the conroe architecture. Either way, it looks like AMD's only option will be to start upping the GHz on there current architecture to try to comepete with Intel in the immediate future.
By the way, a lot of analysts are predicting a price war between AMD and Intel, so look for a ton of price drops this year.