Its purpose is to show that Libby had a motive to lie, because he thought he would be in legal jeapordy if he admitted to disclosing to a reporter Plame's theretofore not known by persons not entitled to know status, which status was classfied, and known by him to be classified.
The defense based on clearing up your errors to the same grand jury is why I brought up the point that Libby admitted his prior knowledge. It's apparent that he admitted prior knowledge, admitted he did not learn it from reporters, and tried to explain that he forgot what he knew. I don't know the law on the subject, but I guess there must be some threshold of non-lameness that your explanation has to cross before it becomes a valid defense.
Her classified status gives both motive and materiality, so the defense gets to go into that.
It is very interesting that the indictment refers twice to discussions that Libby had with others in the OVP about how to respond to reporters' questions, but doesn't say who they were with, or what they decided or whether what Libby did was in conformity with what they discussed. That may have something to do with why Libby lied as well.
Wilson could certainly have been thoroughly discredited without ever mentioning his wife. Why they didn't just do that, I don't know. I speculate that they were caught up in the CIA v. The White House war, and saw Plame's role as highly significant - as we do - because it made L'Affaire Wilson into a CIA disinformation campaign against an incumbent president and they wanted to get that out to the media.
It is hypocritical, to say the least, for Fitz to give a sermon on the importance of telling the truth in the announcement of an indictment for perjury that repeats Wilson's abundant and obvious lies at face value without ever noting their falsity.
If I was Libby, I would make this into the trial of Wilson and the CIA to the max extent possible. There's a war on, ferchrissake.