Catz, I agree with you as well.
I should qualify what I said by adding that I do not plan to hold the commons to emergence and consider that too risky for the reasons you site. I'm a swing trader and plan to sell it on a dip if there is no settlement (and take the haircut) or sell on a pop if another settlement offer is made. The wamu commons are a bit riskier than I usually like but I consider this a calculated risk, short term. Maybe 2/3 chance it rises quite a bit (briefly) and 1/3 chance it falls back. Since it's usually considered poor form to make numerical predictions, I won't do so. But I have specific price ranges in mind and the upside pop would be significant.
To echo your point, even if a sweeter offer is made, the pref's and everybody else would line up to bitch about it and vow to stop it, sue everybody, the usual. Ultimately, unless the hedgies will give up a lot of money, precious little if any will waterfall down to the EC at emergence. The wildcard is if the EC could retain ownership of the massive tax loss which normally does go with the stock. But everyone wants that and it would have to be an agreed upon thing in the global settlement.
If the EC got all of it, it would have a net present value of perhaps $.75-$1.00/share to the commons in real terms, depending on the offer from another firm to absorb it. While I consider such an outcome unlikely, it remains possible. Even though I won't be holding the stock at that time, I kind of hope it happens for those wamuq holders who suffered through this soap opera for the last 3 years.
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