Sago palm is not a palm, it's a cycad (Cycas Revoluta) :http://en.wikipedia.org/wiki/Cycad

It's a bit ultimative to cut all the leaves and you usually don't need to do that if they are still green and firm. It will flush new leaves because by cutting them all off you are forcing it to flush new leaves for its photosynthesis. If the caudex has no sign of rot, it should be fine.

Here is a link that might be useful: Cycads

Well, it's a good thing it's a cycad, because if you had a real palm and hacked off all its leaves, there would be a good chance that you would kill it... but that is not so with a cycad.

You don't have to prune all the fronds off of a cycad. You can prune the brown and sickly ones. It will be a lot happier if it has all of it's green fronds because the fronds give the plant nutrients from the sun.
It will be fine though since it is a cycad and not a palm so they are pretty good with recovering from de-foliating.
-Alex