My Vote for Loki
Since I have wasted way too much time reading this thread, I may as well give my interpretation.
I think it is important to note that there are 3 paragraphs describing the effect of this power and that each paragraph serves a different function.
Paragraph 1: Tells you that you mark the target and how long this mark remains.
Paragraph 2: Describes the effect of the mark.
Paragraph 3: Describes the conditions that lead to the paladin not being able to use divine challenge on his next turn.
The problem with Loki's interpretation (as I understand it) is that it attempts to use both paragraph 1 and paragraph 3 together to determine when the mark ends, when paragraph 3 is not concerned with how the mark ends. The only part of paragraph 3 that should be used in interpreting paragraph 1 is the definition of engaging the target because it is specifically referenced.
Thus, read in this way, paragraph 1 contains all of the operative language for this argument. The mark ends (along with its associated effects) when the paladin uses the power against another target or fails to engage the target (meaning to either attack the target or to end his turn adjacent to the target.)
The language quoted from paragraph 3 that "On your turn, you must engage the target you challenged or challenge a different target" has nothing to do with when the mark ends. It only concerns when the paladin should be punished by not being allowed to use his divine challenge on his next turn.
I think you're quite right jeriatric, but in my opinion your'e Interpretation of the
text rather leads to the same conclusion as Loki's.
Because in the first part of the text there is nothing written that limits the engagement to the very turn when the DC was cast, you cannot assume that it automatically ends at the end of the turn when it was cast and the condition is not fulfilled.
Because if you implicate that "failed to engage or attack"
means "failed to engage or attack until the end of his turn"
without the "end of its turn" actually written in the rules,
you actually read it as "failed to engage or attack at any given time"
I'm sure if this was really meant by the rules in this way, it would have been written completely different.
IMO you only can read it as:
If the paladin "fails to engage or attack" means fails to engage or attack the target with his next possible action. (and I wouldn't count a free action as I don't know a use of a free action to actually engage or attack someone).
So if the Paladin uses DC at the end of his round the enemy cannot lose his mark before the beginnign of the Paladins next turn.
I'm quite aware that this interpretation leads to other contradictions.
And I'm sure there is no contradiciton free interpretation of that given text possible.
But in Gaming terms I prefer the possibility to use DC in this way.