PRECEDENTS FOR CLINTON'S APPOINTMENT:

In 1909, after having increased the salary of the Secretary of State,(459) Congress reduced it to the former figure so that a Member of the Senate at the time the increase was voted would be eligible for that
office.(460)

(459) 34 Stat. 948 (1907).
(460) 35 Stat. 626 (1909). Congress followed this precedent when the President wished to appoint a Senator as Attorney General and the salary had been increased pursuant to a process under which Congress did not need to vote to approve but could vote to disapprove. The salary was temporarily reduced to its previous level. 87 Stat. 697 (1975). See also 89 Stat. 1108 (1975) (reducing the salary of a member of the Federal Maritime Commission in order to qualify a Representative).

http://www.gpoaccess.gov/constitution/pdf2002/011.pdf

There has even been a case before the Supreme Court on this question.

In Ex parte Albert Levitt, 302 U.S. 633 (1937), the Court declined to pass upon the validity
of such an appointment in a case concerning the appointment of Justice Black to the Court.

http://www.gpoaccess.gov/constitution/html/art1.html

The INTENT of the Constitutional provision is to prevent a sitting member of Congress from using his position to get his colleagues to provide him with a cushy sinecure.

For over a century, there has been a consensus that the provision must be interpreted broadly and not used to block appointments where there is no corruption involved.

In any case, as attorney and politcal analyst Jeffrey Toobin pointed out on CNN, the Courts will not block such an appointment if the Senate gives its confirmation and there is no outright corruption. This was shown in the case of Justice Black's appointment.