The latest TIME article on the subject repeats the #3 assertion and says:
And we all know how rabidly pro-Bush CNN/Time-Warner is 
Time's bias is towards profits, so they do have an incentive to blow up this story as it makes their reporting seem more interesting.
Pay close attention to what Condolezza Rice was actually saying in her May 4 meeting with the Australian foreign minister:
"I think that over the next couple of days we
will be able to describe that this is a truly significant arrest. This is, we believe, a kind of -- one of those important
field generals in the al-Qaida organization."
No mention of 3rd in command. If she'd known he was 3rd in command, don't you think she would have mentioned it? At that point the former national security advisor was not even able to describe the arrest as "truly significant". She also describes him as "one of those important field generals." Clearly more in line with the description of him as a middle-level official. Yet the U.S. press, including Time, seems not to care.
