Well, I'm not real familiar with the details either. But it sounded like the Court said that MERS was only a nominee and not the real party in interest. That would mean that there still is a real party in interest -- likely the entity that transferred the mortgage to MERS. Bottom line, it seems to me that there's still a debt secured by a mortgage floating around out there. All this decision said is that MERS isn't the proper entity to enforce that mortgage.
Also, this is surely a looooong way from over. A bankruptcy court is about the lowest level of Federal Court -- lower than the District Court. A decision of this magnitude will almost certainly percolate at least two levels higher, through the District Court and to the 9th Circuit. Bankruptcy Courts are also funny because they have extensive equity powers -- that is, they've got wide authority to void or rewrite contracts in order to achieve justice for debtors and creditors. However, on appeal a higher court could find they've abused that discretion or overreached.
Finally, just from a pragmatic standpoint, I don't see the Courts flat out invalidating huge numbers of mortgages. They'll come up with some way to preserve the status quo. Just watch.