I have avoided saying anything here because I am many miles away here in California and there is really not a lot that I can add--However...
It will probably be 3+ years of work to get the levees sound and some sort of stable infrastructure in New Orleans (time will probably be inversely proportional to money available) before people can safely work/rebuild/live there--you are probably right in your harsh assessment that much of the area (under current circumstances) ought not to be rebuilt as the problems (loss of elevation, loss of marshes, loss of barrier islands) have yet to be addressed—and we maybe going into another cycle of violent weather which will last several decades (if recent history is an accurate precursor).
On the other side of the ledger, the US as a whole has probably done much to damage the local environment due to pumping/oil/gas extraction (lowering the land), ship channels/levees causing the river to scour sediment from barrier islands/marshes and causing them to recede, past encouragement of building in flood planes with flood insurance/dikes, short memories by everyone of past weather disasters, long-term government assistance that make it difficult for them to be come independent of government support, growing US population, etc... All of which has helped make the area and the people more vulnerable.
The good side is that people devastated in the area, whom are self motivated, will probably work their butts off for the next ten years (or more), no matter what eventually is decided, and they will (for the most part) recover.
The downside is that the poor in the area will probably remain poor (and vulnerable) no matter what is eventually decided as nobody in power really cares (or really has the power to change those folks lives).
And our governments will waste tremendous amounts of the people's money—creating both good and bad, while some folks will get rich while (legally and illegally) siphoning the cash stream. And local corruption will not get any better.
Do I have any answers—No, not yet. But I do believe that we owe the folks of the gulf coasts a little bit of sympathy, understanding, and material support.
There But for the Grace of God go I…
God Bless
-Bill