I'm not going to give you advice but my opinion, for what it's worth, isn't what this board wants to hear.
Setting aside your numerous questions:
Forget about equitable principles. To give you an analogy, Treasury is the senior creditor. If the GSEs aren't worth more than Treasury is owed, that means you don't get any recovery. None. This is why I sometimes refer to Enterprise Value instead of Equity Value (not to get into the unique aspects of valuing the GSEs). Preferreds are equity but in reality they have a contractual debt component, which is why they are senior to commons. This is priority. Who gets paid first to who gets paid last. If the seniors aren't satisfied, juniors and commons get zilch.
Upon release, liquidation preference matters. Once again, the overall value of the GSEs will determine the value of the JPS and commons. I believe Treasury, who holds all the cards, will structure a deal that gives them the most combined value of their SPS and warrants, while at the same time limiting or eliminating any perceived or actual legal liability. Because of the JPS's rights (more or less the same as the SPS rights), a deal will likely be struck that moots the $33B+ liability, which leaves a nominal amount of liability for commons.
How is this done? With conversion of SPS and JPS. Or further amendment of SPS into convertible shares and conversion of JPS. In either scenario warrants come into play. It's not so much the warrants have a lot of value, it's they can be used as a tool to meet a desired result.
Eliminating commons altogether creates a (weak) legal argument. Diluting commons 99.999% does not.
I believe the Ropp Case? is the case where you will likely hear about equitable doctrines. I think it's a great legal case and the only case that could get the 3rd amendment tossed. But even if the plaintiffs are correct, I believe the courts won't have the stones to rule correctly and will rely on some form of equitable mootness (sort of like how SCOTUS wouldn't touch the last Presidential election). In other words, the 'equity' remedy isn't one you'll like.
