As to your commentary, I just don't know yet.

I (currently) doubt that Bush had any prior knowledge of the case, but it is starting to look like Rumsfeld did (but claimed he did not? I'm sure we will get some clever parsing of his exact words to show how he technically did not lie, ala "the plan is not on my desk". Cripes.).

Here's how something like this should be handled in my universe:

Best case
You know that it's critical to maintain credibility with the Arab world and the world in general if you want success in Iraq. You set up some commitees to brainstorm up a list of all the bad things that can happen to you. At the top of the list are things like corruption scandals, and mistreatment of prisoners. You Brainstorm up action plans to avoid any such things from happening. On the action plan concerning prisoners, at the top of the list, is that all troops coming into contact with prisoners should have clear, unambiguous guidlines on their own behavior. Since it is so vitally important, the president should reach out to the joint chiefs to make sure that a warning goes down the ranks. Make it a priority. Set up some civilian inspections. Again: you make avoiding bad things a priority. You put in place plans to avoid them. I do this for a living. It's project management 101. It is not hard or impossible or even necessarily expensive, and it is usually worth any investment.

Worst case
The worst has happened. The Red Cross has gotten inklings of what's going on and are writing discrete letters to DoD. You have an investigation, to determine the truth. You break the story yourself and make it a big deal in the news that you found some bad practices and you are nailing the perpetrators to the wall.