The controversy over the Libby commutation raises a question that has been with us from the framing of the Constitution: Does the vesting of the pardon power in the President lead to corruption, as Presidents use it---or the lesser included power to commute a sentence---to reward their friends and cronies? The issue is all the more acute since the 22nd Amendment ensured that second-term Presidents would pay no direct political price because they know they don't have to face the voters.
By way of comparison, it's worth noting that many states have gone away from the traditional system whereby the Governor in his or her discretion grants clemency, and towards vesting the power to grant clemency in a Pardon & Parole Board. Even in states where the Governor maintains the nominal power to pardon or grant clemency on his or her own motion, that power is often not exercised so as to avoid "politicizing" the process. Indeed, even at the federal level, pardons are generally handled through the Office of the Pardon Attorney, except of course, when they're not.
It's clear from Article II and Supreme Court precedent that the President has the power to pardon on whatever grounds he deems appropriate, regardless of the criteria and advice of the Department of Justice. Only a constitutional amendment could eliminate or curtail this residual discretionary power. I don't kid myself that such an amendment is in the offing, but it's worth asking whether it would be a good idea if possible.
On the plus side, taking politics out of the pardon/clemency process would foster fairness and prevent lame duck Presidents from abusing the power to undermine independent prosecutions. On the minus side, there are probably some worthwhile pardons that would not satisfy any generally desirable criteria and are such hot potatoes that ONLY a President can take the heat for them (whether or not he's a lame duck). Ford's pardon of Nixon was, in retrospect, probably an example. On balance, that's not enough to justify our current system, so count me as mildly favoring tinkering with the pardon power if and when there's a Constitutional Convention.