Unless AA and Expedia resolve this, or Citi makes some other arrangement with AA, this eliminates the ability to redeem Thank You points for international or premium class domestic tickets on American Airlines.
It's unclear whether this will have an effect or not on TY Network flight redemptions on AA. My guess is that Citi already has their own agreement with AA (and all participating airlines), and Expedia is merely handling the administrative details. I don't think there's any way that Citi is actually paying $1600 for 60k-point flights to India. Probably the only way to find out for sure is to call them up.