I can't comment on all the machinations involved here and what they mean, but:

Attorneys for the state want a federal judge to let Arizona begin enforcing the provisions of Proposition 200 next week.

In legal papers filed Monday, Mary O'Grady, the state's solicitor general, said nothing in the voter-approved initiative conflicts with federal law. She told U.S. District Judge David Bury of Tucson that the state is entitled to tell government workers to check the immigration status of applicants for public benefits.

O'Grady said Bury should also permit enactment of a related provision that requires those same government workers to file written reports when an applicant turns out to be in the United States illegally...

See also "Prop. 200 supporters file motion to intervene in lawsuit":

A group supporting a voter-approved initiative aimed at keeping illegal immigrants from obtaining some government services filed a motion in U.S. District Court in Tucson to be allowed to help defend the measure.

An attorney for Protect Arizona Now filed the motion Monday to intervene in the lawsuit the Mexican American Legal Defense and Educational Fund filed Nov. 30.

MALDEF's suit argues that Proposition 200 is unconstitutional because it usurps the federal government's power over immigration and naturalization...