Yes, I think it is safe to say that the New York Times' experiment with a "public editor" has officially failed. "OK, our top tech columnist has a glaring, obvious conflict of interest, and that conflict is now the only conceivable explanation for an otherwise patently insincere and misleading review, but we can't possibly correct the situation; doing so would 'deprive' the readers of his 'expertise'."
Excuse me, Clark Hoyt, but are you literally, physically dickless? If reporters don't need close scrutiny to ensure their personal interests don't influence their "expertise", then what the hell do we need a "public editor" for at all? The premise of your job is that conflicts of interests cause harm and ought to be avoided! Readers don't need a "public editor" to tell them they shouldn't question David Pogue's integrity because he's a nice, talented, funny guy! That's the side of the argument opposite the one you are supposed to be representing!
Once again, Cosh's Law of Newspaper Ombudsmen holds true: we are supposed to believe they exist to defend the interests of the reader against those of the newspaper, but their actual job is precisely the opposite.