I recall reading somewhere that the FAA wasn't in favor of the pictures but homeland insecurity was behind the rule. Last I heard they dumped the idea due to the cost of implementing it and the lack of usefulness.
Actually, the photo ID requirement appears to have been part of a law passed in 2004, so neither the FAA or DHS had anything to do with it. Odd to issue an NPRM for something allegedly mandated by congress. Here's a summary article from AOPA, though it doesn't appear to have been updated in the last few months: http://www.aopa.org/whatsnew/regulatory/certificates.html
