I didn't read that he instructed the jury to take note of the lack of testimony. I read (in admittedly garbled syntax) that the judge made these points to counsel out of the presence of the jury.
Counsel misled the judge. He can't make the point about the lack of testimony before the jury, but he absolutely can weigh it when making his OWN discretionary calls on procedural and evidentiary issues. Looks like he did.
If the Appellate Court agrees with him, then he was right.
The Appellate Court probably will agree with him. After all, what was put into EVIDENCE that Libby was busy with national defense matters? That was supposed to be presented by Libby in testimony. Well, defense pulled the rug out and didn't put Libby up there, so they can't make the argument to the jury based on evidence they didn't present. Sounds like the judge got it right, evidence-wise. The fact that he certainly took a great deal of malicious delight in doing so can only be expected - I would have if counsel had screwed with me like that. So long as the judge is right on the law, the smile and warm glow he gets inside reminding counsel who is in command in his courtroom is not a legal matter.
Sure, defense can argue on appeal that it's all unfair. But how are they going to win? What EVIDENCE did they present that Libby was overwhelmed with national defense matters? He COULD HAVE presented that evidence, on direct, but that would have subjected him to cross. Counsel told the judge Libby WOULD present evidence on direct, but then shied away from the cross (I suspect to protect higher-ups, I suspect because the fix is already in on the Libby pardon, so losing doesn't ultimately matter but keeping higher-ups from being subject to cross does). The evidence wasn't presented. Without the foundational evidence, counsel cannot make the argument to the jury. The judge said so, and he was well within his power to do so. That the judge did so angrily and with a good deal of malicious delight? Well, what do you EXPECT when you screw with a judge? He's got the power, and he will jump all over your head and go cock-a-doodle-do if you forget it. Like here.
Of course my comments are all speculation from a garbled news report, so none of this amounts to more than armchair commentary.
So if I am at the Rotary meeting at the time of the bank heist, I have to take the stand in order to prove my whereabouts at the time of the crime. Others with knowledge of my whereabouts just won't do the trick.
In fact, the defense never categorically said that Libby would testify, as I understand it. If the judge assumed Libby would take the stand, that's his problem. In any event, evidence of Libby's involvement with major issues should not depend solely on his testimony anyway. To say Libby must testify to prove such matters were greatly weighing on his mind is an absurd proposition.
Maybe I'm missing a federal rule, but attorneys are 1) not required to tell the judge their strategy, and 2) are or should be open to changing their game play after the brunt of the prosecution's case. In other words, if the judge feels he was mislead, that's tough. The attorneys have a duty to their client, not to keep an obviously biased judge up to speed on what's going on.
As far as the evidence goes, they CAN make a bill that would outline what evidence would be presented if allowed, and this will give the appellate court an idea of what the evidence is.