As far as I can see the Knights do not require papal approval for the election of their Grand Master, he is elected and that is it.  They operate under their own constitution. They are not a religious order in the sense that the Friars of the Immaculate are where they can be brow-beaten by the Vatican into submission. 
The Pope may,  if he dares withdraw his patronage of the Order, withdraw its privileges and the appointment of a prelate but that will not destroy the Order. A future pope will no doubt in due course restore all these. Don't forget the Jesuit Order was suppressed at one stage in its career only to be back with a sorry vengeance today.
Someone in the Vatican, it seems, has jumped the gun here.