At Dick Cheney's undisclosed location?
Seriously, I anticipate he's been in prison the entire time, occasionally getting grilled. They finally put enough pieces together to nab ol' what'shisname last month, breaking the plot wide open. And they likely then tracked it back to al-Libbi. As more of a managerial type involvement, is my guess. But mentioning his name gets the Pakistanis a little more credit.
This is a misunderstanding. The quote from the Dawn is
August 16, 2006 Wednesday Rajab 20, 1427
ISLAMABAD, Aug 15: 'Al-Qaeda's No. 3' was the mastermind behind the plot to blow up transatlantic flights, an intelligence source said, here on Tuesday. "It is not Osama bin Laden and it's not Aiman Al Zawahiri, but someone close to the rank of Abu Faraj Al-Libbi," the source said.
http://dawn.com/2006/08/16/top1.htm
So, it is just the new No. 3! (and not Libbi)