So it seems like the developers had some discussions about the market pegged assets and the market engine since it had become too complex and buggy, and decided that it needs to be completely revamped.
The new system proposed here will remove shorting, remove interest rate on bitassets (possibly removing yield altogether), and remove relative orders (which were apparently too problematic to implement). New market pegged assets are created by "issuing" them, creating them while locking up 3x their value as collateral in BTS. This is basically like shorting to yourself at the feed price at 0% interest rate in the current system. Once you've issued a market pegged asset you can then sell it on the open market for BTS to get leveraged exposure to BTS, just like before.
It sucks we are seeing changes like this at this point, but on the other hand this new system really is a lot more elegant and will probably allow the market to function a lot more smoothly. I suspect the issuing mechanism can also be used for the prediction markets.