Correct me if I'm wrong, but memory tells me strict accounting mark to market rules came out of the S & L crisis as a solution to prevent failure due to the overstated value of assets.
I don't think we should take lightly any vacation of mark to market rules.
The core and substance of the Paulson Plan - namely the creation of a reverse auction system in which the Treasury acts as the buyer of last resort for mortgage backed securities to help troubled institutions get this hard to value paper off their books - is a sound plan. I think the public and congress over-reacted and so I'd have to say the administration didn't do such a great job selling it.
What we have here is a pricing mechanism failure. Rather than masking the problem with a mark to market vacation - which BTW might not be so easy to undo - the auction system could jump start a real market and other buyers might follow. That's a real fix in which taxpayers are NOT bailing out but buying mortgage backed paper that likely has value far above the purchase price.
I would hope that policiticians could demonstrate leadership and good statesmanlike qualities and help their constituents understand simple business concepts rather than the easy role of demagogue.