Initially, the joint ISI-FBI plan was to take Shaikh Mohammed alive so that he could be grilled, especially as he was believed to have knowledge of other al-Qaeda cells in Afghanistan, Somalia, Sudan, Yemen and elsewhere. However, as a plainclothed officer climbed the stairs toward the third-floor apartment, a hand grenade was thrown, and he retreated. Reinforcements then arrived, and for the next few hours a fierce gun battle blazed.

The FBI, still keen to take Shaikh Mohammed alive, teargassed the area, and a number of people were captured. However, despite instructions to the contrary, a few Pakistan Rangers entered the flat, where they found Shaikh Mohammed and another man, allegedly with their hands up. The Rangers nevertheless opened fire on the pair.

Later, the Pakistani press carried pictures of a message scrawled in blood on the wall of the flat, proclaiming the Muslim refrain of Kalma, in Arabic: "There is no God except Allah, Mohammed is his messenger"). An official who was present in the flat at the time of the shooting has told Asia Times Online that the message was written by Shaikh Mohammed with his own blood as his life drained from him.

Subsequently, to their surprise, the raiders learned that Ramzi Binalshibh had been netted in the swoop. And nothing further was said of Khalid Shaikh Mohammed.

But now it emerges that an Arab woman and a child were taken to an ISI safe house, where they identified the Shaikh Mohammed's body as their husband and father. The body was kept in a private NGO mortuary for 20 days before being buried, under the surveillance of the FBI, in a graveyard in the central district of Karachi."

 http://www.atimes.com/atimes/South_Asia/DJ30Df01.html

In fact the imposter KSM shown in the media photos bears a strong resemblance to a local learning disabled person called Abdul Ahmed Qudoos arrested at this time
Photographic comparison, and more detail can be found at this link

 http://iamthewitness.com/Bollyn-Ahmed-Abdul-Qadus.html