I had an emergency c-section with my first under sort of similar circumstances (water broke, no contractions, induced with pitocin) but the main difference is that the cord was around the baby's neck.
With the second one, I sort of assumed I'd have a scheduled c section, because I'd heard the recovery was so much easier than having to have surgery after laboring for so long. But after switching OBs, the new one pretty much convinced me to try for a VBAC, basically saying, we'll just see how it goes, and if we end up needing a c-section, well, we can do that too.
So I think I went in with a really open mind. Basically, I was going to try for the VBAC, but if it started to become clear that a c-section was going to be the best option, we'd fall back to that. I wasn't willing to labor for hours on end only to have the surgery, so my plan was to pull the trigger on the c-section choice much more quickly than we did the first time around.
The other thing was that I told myself that I was NOT going to go in if my water broke without any accompanying contractions. I think that was my first mistake the first time around. Because once you are admitted into the hospital under those circumstances, the clock is ticking. They want you to deliver within 24 hours to reduce the risk of infection. But I figured that I know how to keep myself in a clean environment if it came to that.
Anyway, it turned out better than I ever imagined. I went into labor naturally but didn't go to the hospital until my contractions were four minutes apart and one minute long. I was already 5 cm dilated when they admitted me. I was able to deliver my daughter via VBAC with no epidural within 2 1/2 hours of my arrival to the hospital.
The difference all this made in my recovery was amazing. I was able to go home to our older son after one night, and we were back to our normal routine of playdates almost immediately. I'm sure that it helped ease the transition for him immensely. I remember, when he first saw me in the morning after I came home, he ran right into my lap. I recall thinking, "Oh my God, if I had had a c-section, that would have been AGONY."
I say go for it but go in with an open mind. If you end up having to have another c-section - well, you've done one before, you can do it again. Good luck.