Update: Kevin Drum echoes my sentiments (well, he didn't read my post to come to this conclusion, but you get my drift).
Josh Marshall wrote a fascinating post discussing Thomas Jefferson's reflections on the possibility of the chief executive needing to bypass federal law for the sake of expediency or of protecting the Republic. Jefferson's idea is that, for sure, it may happen in some cases, but in such an event the President must then go before Congress/the people/the Supreme Court/whoever and admit that he broke the law, explain the necessity of his actions, and place himself at the mercy of the rest of the country to decide his fate.
Josh has some good commentary on this, and my perspective is similar, though perhaps not identical, to his. Jefferson's idea of what a president should do in such cases preserves the rule of law. The president is never above the law, but there are times when he must break it and then ask others with a greater share of sovereignty than himself to change the law to make an exception for him. Thus the rule of law remains inviolate.
This is substantially different from what W is doing. He is saying that, by virtue of being a wartime president during the War on Terrorism, he has the authority to set aside the law, answering to no one for his choices: not the Judiciary, not Congress, not even the Constitution itself.
Yet the point of the rule of law is that it cannot be bypassed or partially recognized. You either have it or you don't. W is by no means the first president to set aside the rule of law; many of even our greatest presidents have done so in wartime. All of those other cases, however, differ not only from Jefferson, but from W. Jefferson believed that the law was always supreme, even during wartime, while W is trying to lay the groundwork for an executive that is more or less permanently above the law.
Does that sound harsh or dramatic? Think about the War on Terrorism for a second. When does it end? When the practice of terrorism is wiped off the face of the earth, or perhaps when no fringe militant group has a beef with the U.S.? Such objectives are impossible, and therefore the "war" to achieve such objectives could last, in theory, forever. Thus every president from now on could be considered a "wartime" president, possessing the power to bypass standing law at his prerogative.