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It seems that the last line of that excerpt was tacked on so that their funding would not be reallocated after W decided he wanted us to go to Mars.

Exactly. The currently planned CEV is little more than soupped up Apollo (BTW, not only parts, but tooling for Saturn V have been destroyed; I am not sure for blueprints). There were some noises that CEV could end up as a lifting body after all (and, hopefully, hence test with Rutan's White Knight dropping X-37; I am not holding my breath, though, because X-37 is now DARPA's project, not NASA's).

In the meantime, NASA cancelled X-38 CRV 'ISS lifeboat' just when it passed high altitude drop tests and was ready for re-entry from the orbit test. It could have relatively easily been upgraded to 'ISS Crew Transportation Vehicle' (leaving heavy lifting to unmanned missions). They gave up on 'VentureStar' SSTO because of hydrogen tank problems. Those problems have been solved in the meantime, but nobody talks about SSTO (or anything meaningfully reusable) any more. Some two decades ago there was a grandiose NASP SSTO project that consumed prety enormous funds, and was abandoned. Now, when aerospike 'conventional' engines, as well as hypersonic SCRAM ones have been successfully demonstrated, mentioning SSTO is a recipe for being kicked out of NASA planning bodies.

I am affraid that Dubya's new 'vision' of return to the Moon and then Mars is just for show. I don't see anything like NASA in the wake of Kennedy's "We choose to go to the Moon!". It was focused, it had "can do" mentality. Some collosal blunders were done (like Apollo 1), but also spectacular successes (11 and, perhaps even more, 13). When today's NASA guys saw that fateful piece of foam hitting the wing leading edge, they firmly burried their heads into sand (e.g. first asking, but then quickly cancelling request that spy guys use telescopes on their birds to look into the state of the orbiter). Apollo era NASA would try to do something: in-orbit repair, launch another shuttle, ask Russians to launch a Progress or Soyuz with oxigen and water to buy some time, something. Perhaps those seven people would die anyway (they probably would), but they would have died fighting.

Sigh...