I'm not so sure that they do any manipulation. Market Makers are arbitragers, and often it is done by computer. When they shorted a GM (now MTLQQ) share at $1.50 and wrote a put for 50 cents and brought calls, they really can't lose. If GM goes down, they make money from shorting the share outright. If GM goes up, they make money on the call. If GM stays the same, they make money on the put premium. They just arbitrage the inefficient market because they can do things that normal people cannot (mainly short GM shares).
I think it is just countless numbers of misinformed people that caused the rise in GMGMQ price. It's hard to manipulate volumes of 70-100 million per day for 2 weeks before the June expiration.
You are correct that we don't know who wrote those puts and how they may be hedged. Who knows, maybe AIG wrote the contracts and will go begging for another bailout.
I do know, however, that barring some kind of insane manipulation the last 4 1/2 hours here, 8 million shares are going to be put back to options writers. I doubt they will be hanging onto those shares on Monday.