[antiRepublicrat]

http://www.nps.gov/revwar/about_the_revolution/privateers.html

After reading that, it appears that the broader interpretation was right. These ships, one with 26 guns, legally existed in private hands. The letters simply let them legitimately conduct the pirate activities they were capable of.

[Dead Corpse]

The Letters used against Barbary went into a bit more detail than that. They set up pretty stringent guidelines as to what was a viable target, how much of the loot the FedGov got, how much was to be shared among the crew, ect...

Effective in a limited scope. No real replacement for a professional Army, but bounty hunters operating under Letters of M&R could be extremely useful in hunting terrorists today.