Mexico: The Amigo Country, At Last

Holy guacamole, amigos! Who'd have thunk that our very Catholic goody two shoes President Vicente Fox would pass a law decriminalizing personal possession of every recreational drug known to man? Wowie! Or is it, yikes!?
This is supposed to end with low level police corruption, but somehow it sounds to me like the President is opening up the lucrative street market to the Mexican drug cartels, so there will be more consumption. Of course possession is allowed but selling is not. I don't even hope to attempt to understand this arrangement. If a good samaritan would explain it to me, I'd be forever grateful.
To begin with, since time immemorial you could be Mother Theresa of Calcutta and if you ran one night into a frisky Mexican policeman he could plant the drugs on you in order to extort money. So what would impede them now to plant more drugs than the personal amount permitted by law? How does this law change anything for the better? According to the NYT:

Under the bill, it would be legal to have 25 milligrams of heroin, a fifth of an ounce of marijuana or half a gram of cocaine. The bill also makes it legal to possess small amounts of LSD, hallucinogenic mushrooms, amphetamines and peyote.

The good people from AP helpfully decode this for you: the marijuana amounts to like four joints (the issue is are they Mexican sized, which tend to have the girth of stuffed burritos, or American sized -- sad, puny little roaches). Cocaine, give or take about four lines. Jesus, Maria y Jose! That's a lot.

Those quantities are sometimes eye-popping: Mexicans would be allowed to possess 2.2 pounds of peyote, the button-sized hallucinogenic cactus used in some Indian religious ceremonies. Police would no longer bother with possession of up to 25 milligrams of heroin, 5 grams of marijuana (about one-fifth of an ounce, or about four joints), or 0.5 grams of cocaine — the equivalent of about 4 "lines," or half the standard street-sale quantity. The law lays out allowable quantities for a large array of other drugs, including LSD, MDA, MDMA (ecstasy, about two pills' worth), and amphetamines.

Life in Mexico is already surreal as it is. Imagine now with peyote and x for breakfast, lunch and dinner... (on the other hand, Mexican bureaucrats on speed or coke: it's a thought)
Of course, people in the United States are already tearing their hair out: what's gonna happen to the innocent youth of America?

Some worried the law would increase drug addiction in Mexico and cause problems with the United States. Millions of American youths visit Mexico's beach resorts and border towns each year. "A lot of Americans already come here to buy medications they can't get up there ... Just imagine, with heroin," said Ulisis Bon, a drug treatment expert in Tijuana, where heroin use is rampant.

Hey, knock yourselves out. Boy, between that and the spic national anthem we sure are rubbing the gringos the wrong way this week.
I must say, I'm the first one to opt for the legalization of drugs, mainly on account of making the suppliers pay taxes and engage in fair trade so the cycles of murder, crime and violence can stop, but somehow I don't have a feeling this law is going to work. Why? Because Mexico is a mostly lawless country anyway. The laws are certainly there, yet with a little hand greasing they can be bent, broken and ignored. The drug cartels are not going to sink into their cushy sofas and watch their profits shrink even a tiny little bit. There are many government officials of all levels in blatant cohoots with the narcos.
So I'd love for somebody to explain to me in Mexican reality terms, not abstract idealized terms like those handled by the pols, if this law really is a step in curbing the excesses of the cartels, or if it's something more mysterious and sinister, with consequences and implications we can't even imagine.