Alright Friend,
I may not possibly be able to give you any code at the moment 'cause I have to do few tests to do so but I can give you idea.
See this is obvious, your code actually picks the value of the textbox which the user has entered. So, you have to do something like this.
1. Everytime the autcomplete generates the suggestion store it in a global variable which is available to at least the functions defined inside $(document).ready(function(){});
2. When you have stored the variable, now when the focusout event is fired simply use the value stored in the variable rather than the value from the textbox.
Now to implement the first part I would suggest you to look
Here
Hope it is of some help. Do rate it :)
With Regards
Tushar Srivastava