Lord Lardy
The funds for this runway were agreed a few years ago when government allocated funds towards regional airports, a few airports including Knock, Kerry, Galway , Sligo and Waterford not sure if any others were included. If I remember this money came from Brussels. Galway Sligo and Waterford said at that time that the runway would be extended.
I would agree with alot you have said, Ryanair would probably make a spectaclar return to Waterford (since they departed on that August day of 92!) and wipe out Aer Arann!
Aer Arann has been good to Waterford but my own personal opinion is that they will be adsorbed by a bigger carrier within the next year, maybe Flybe, so Waterford may need Ryanair in the future. I would expect an operation similar to that at Knock with Ryanair.