Sorry grnbook - While ASOS/AWOS is a good system, getting rid of the NWS people would mean that we, as controllers would end up doing the weather observations. If you've ever taken the weather observer test, you know it's hard. Most people don't pass it the first time. And those NWS people have other equipment to check against the AWOS/ASOS equipment. Equipment we don't have room for in the tower. I know for a fact that our NWS people only get $10-$15 an hour. That comes out to a lot less than what you heard.
As for the FAA not knowing what they are doing - spot on. Seems their only motivation is monetary savings, not safety.