I must admit to a lack of knowledge on the subject so I ended up doing a quick bit of research. The actual title of the convention is the "Hague Conference on Private International Law Convention on the Taking of Evidence Abroad in Civil or Commercial Matters" (find the actual convention here). A quick scan of the document would seem to indicate that it does not apply to criminal law. However, I did not sit down and read it indepth because I really didn't want to figure out statements like "The present Convention shall enter into force on the sixtieth day after the deposit of the third instrument of ratification referred to in the second paragraph of Article 37" which make about as much sense as "During the third reconciliation of the last of the Meketrex Supplicants, it chose the form of a giant Sloar."
In the end, I must conclude that my reading is in error, lacks proper context, or that there are other sources for this power. At the very least the State Department, which I assume has far greater knowledge on this matter than I, believes that letters rogatory can be issued in criminal matters by American judicial authorities. However, the letter rogatory seems only to allow a deposition, without presence of US trial counsel and most likely without any cross examination:
The foreign court will execute a letter rogatory in accordance with the laws and regulations of the foreign country. In obtaining evidence, for example, in most cases an American attorney will not be permitted to participate in such a proceeding. Occasionally a local, foreign attorney may be permitted to attend such a proceeding and even to put forth additional questions to the witness. Not all foreign countries utilize the services of court reporters or routinely provide verbatim transcripts. Sometimes the presiding judge will dictate his recollection of the witness's responses.This raises all sorts of constitutional issues about the right to counsel, the right to confront, the right to compel witnesses to appear in the courtroom (where a jury can judge their demeanor), etc. These three spring immediately to mind; I'm sure there are other problems with this process.
[addendum] According to the IRS, Egypt is not a signatory of the Hague Convention on Evidence (see first paragraph of sec. 5). So the judge must believe that his power to do this proceeds from another source. Anyway, since the trial is already in progress it would seem too late for a letter rogatory. The articles I've read all seem to indicate that the process is long and complicated and probably could not be completed by the end of the trial - much less the prosecution's case in chief. Although it would seem unlikely, maybe the witness has already voluntarily come to the U.S. Maybe the government plans to compel Rueters to give it the information somehow (though this would again seem to cause hearsay issues and a violation of the right to confront).
I just wonder if the government might have fought hard for an empty victory. Of course, I'll never know. No paper will cover this indepth enough for a satisfactory answer. If anyone out there understands all this feel free to drop me an e-mail straightening out any misconceptions I have and/or explaining the realities of the case.