Hmm, I've not been short on criticism of and frustration with the Labour party over their opposition. They were absolutely useless in opposing Brexit in 2016, despite it being their official policy, and have come up with nothing useful since!
However, I can see the reasoning in this decision. As you say, they will alienate half their voters whichever way they jump. Saying that they will negotiate a deal and then give us a referendum on accepting the deal or remaining seems attractive.
I have absolutely no confidence in them being able to negotiate a deal though, so we would have a referendum, (presuming they could get a deal through parliament), choose to remain and then be stuck with Corbyn running the country and all the horrors that might bring on!