It seems superficial to make the following analysis: (1) Congress always regulates the jurisdiction of federal courts; (2) the Schiavo statute is such a regulation; (3) it does not overrule any substantive state law; (4) instead, it merely guarantees a forum for the hearing of certain claims; (5) therefore, all is well in Libertopia. I apologize to St. Thomas for the crude summary, but that seems the thrust of the argument.
The problem is not that Congress is attempting a de jure modification of state law. It's that Congress is attempting a de facto modification of state law in this case. Judge Wilson put it well in the Circuit Court dissent. "Congress intended for this case to be reviewed with a fresh set of eyes." What does that mean exactly, that Senator Frist just wanted another hearing? He likes lawyering for its own sake and wanted to watch the argument? Surely not. He, like most people who deal with the law, wanted to win the case when he passed the statute. Unless you believe him to be the real hypocrite (i.e., that he actually cares not at all about Ms. Schiavo and truly used the case only for political theater), he must desire that the federal court reach the opposite result from that reached repeatedly by Florida courts. He doesn't care about the jurisprudence at stake; he wants to know what the power of the state will compel (and in his case, as a legislator, he wants to change what the power of the state will compel here).
That desire is the real problem with the Schiavo statute. Not that it offends hoary precedent taught by Professor Monaghan, but rather than it demonstrates a willingness by Congress to act as a de facto appellate court. If Congress disagrees with a state court decision when sitting as a pseudo-court, it will whip up a quick statute allowing a non-pseudo court (i.e., a federal district court) to rehear the case. If Congress agrees with the decision below, the ruling is final.
Back in the old days, American legislatures often did sit as judicial bodies in their spare time (hence the state legislature of Massachusetts is even today called the "General Court"). That objectionable practice was abolished some time ago, and it's disappointing to see those normally in favor of separation of powers, federal-state comity, and stuff like that support the revival of legislative adjudication.