Well, they can wish for Watergate until the cows come home. The White House can hand out credentials to whomever it wishes to.
I don't know if it is a conspiracy per se. Like Rathergate, it is a combination of sloppy journalism along with a desire to see what one wants to see. Throw in the passalong nature of liberal blogs and the William Bunch account got transmogrified.
Now, I would like freeper advice as to how to best proceed with this story. The initial read was not entirely correct - there was a pseudo-Daily News story related to this story - and I can see an honest mistake being made if someone outside Philly who doesn't follow the Daily News doesn't realize that William Bunch's blog (he's a DN political reporter) is only loosely affiliated with the paper itself, since the Daily News logo is on the blog. However, there are serious errors in the attributions to Bunch's blog - at least two clear lies that I can see in comparing the Niagara paper's letter to the Bunch blog column.
I am going to research this further to see if I can trace how this got warped. I have a feeling that the details of the story were altered over two or three generational tellings on liberal blogs. Which would make a very interesting story on the problems with those blogs - problems that mirror Rathergate on a smaller scale.