Every manager will have their flaws whether that be tactically, man management or signing players - looking for a perfect manager is pointless.
Rafa took over the team that Houllier left him and transformed it into a title challenging side whilst winning trophies along the way.
Yes, he spent a chunk of money doing it (we aren't talking man city levels of spending though) but he also recouped a lot as well.
Tactically he was spot on and had us punching above our weight (especially against the big teams) and we were always in the latter stages of the CL.
If they want to give someone 5 years to turn things round then, what is he 51 or 52 now, so plenty of time ahead of him. Just seems an easy decision to make to me.
The fact he loves the club, is probably sitting in his house in Liverpool currently doing nothing makes the decision even easier.
As someone said, imagine if FSG had been in charge when he took them to second - even if they had backed him modestly but allowed him to retain the team he'd built we'd be a completely different situation now. Get him back as manager, back him with the money and time that were missing last time and we will reap the rewards.