Is there any better proof of the insanity of our campaign finance regime than the prospect of Michael Bloomberg spending a billion dollars of his own money---projected to be more than the combined sums spent by the Democratic and Republican candidates and parties, as well as third-party expenditures---to buy the Presidency? The "billionaire loophole" arises because Supreme Court doctrine since Buckley v. Valeo permits contribution limits but not spending limits. A wealthy person spending his or her own money to get elected is not contributing to any campaign, just spending, and thus avoids the limits.
Bloomberg's likely impact on the race is uncertain. If Rudy Giuliani captures the Republican nomination, Bloomberg could help the Democratic nominee. Christian conservative voters would be unhappy with the entire field and some would therefore stay home, while some number of moderate Republicans made uncomfortable by Giuliani's authoritarian style might stray to Bloomberg. On the other hand, if the Republican party nominates a candidate who is conservative on social issues, it's easy to see Bloomberg syphoning more votes from the Democratic nominee. Much will also depend on where Bloomberg stands on the Iraq war. His personal website has an issues section that does not mention the war. (I mentioned it once, but I think I got away with it.) That's forgivable, I suppose, in someone who is currently Mayor of New York and not an announced candidate for President. If Bloomberg does become a candidate, however, he'll have to take some position on the war, and whichever way he goes will likely have an impact on whether his candidacy hurts the Republican or Democrat more.
Notice that I'm talking about Bloomberg's impact as a spoiler. Given the track record of American third party candidates, it's just not plausible for Bloomberg to get elected as an independent. So what gives? The answer, I'm afraid, is the obvious one: ego. As a New York resident, I can say that on the whole, Bloomberg has been a very good mayor. If Giuliani proved that New York City is not ungovernable, Bloomberg has proved that the city is governable without the need to antagonize large numbers of people. At the same time, however, Bloomberg has shown himself to be fond of the big gesture for the sake of the big gesture. His quest to bring the Olympics to New York---an insane idea that would have been a financial, traffic and security nightmare---is emblematic. At some point, Bloomberg was persuaded that having the Olympics in New York City would be glorious, and no amount of reasoning would stop him. Likewise, I imagine that some sycophant said to Bloomberg that given what a good job he's done as mayor, he would be a terrific President, and because he would have serious problems capturing the nomination of either major party, he figured he could just self-finance.
Ours is a badly flawed system for nominating Presidential candidates. Under the right circumstances---if, say, both parties nominated racists or extremists of one stripe or another---a viable third-party candidacy would be a welcome safety valve. But we have nothing of the sort here. On most major issues on which he has taken a position, Bloomberg's views place him in the mainstream of the Democratic Party, which is not surprising, given that he was a Democrat before running for NYC mayor as a Republican (because he figured he couldn't get the Democratic nomination). Bloomberg would add precious little to the race except uncertainty and the possibility that a majority of voters actually oppose the winning candidate. That didn't work out so well the last time it happened.