First off, thanks to everyone for a nice calm rationale debate...this has been a lot of fun.
I will argue a couple more points.
If the rules text resets with everyone use of challenge, then I would argue that there is no purpose in the clause "Engage your challenged target or challenge a new target".
That clause is for subsequent rounds. In the first round, you cannot challenge a new target; but the rules apply to each round: and on subsequent rounds you
do have the option to continue engaging your current target
or to challenge a new target (which in turn you must engage).
Without the "or challenge a new target" clause, the rules specify a penalty if you fail to engage; they specify that the power ends when you challenge a different target - but they don't (clearly) specify that the penalty is avoided by when you challenge a new target.
I've advocated before on the 4e errata forum that this way of putting things is confusing and hard to grasp, but with the current set-up that clause is necessary for at least some semblance of clarity.
If whenever I challenge a target I must engage him, then the text could simply read "You must engage the target you challenged.".
If it said that, then you would need to engage the
current target of the power. Using the power on another target would not release you from this requirement - at least not clearly. If they'd additionally noted something to the extent of "until the challenge has ended", it'd be sufficiently clear, and it would intuitively work the way you expect when overwritten by another mark or whatnot.
Second, there can be some argument that effects of the first use of the power could effect the second use. Here is one made up example.
Let us say I had two encounter powers that did the following:
Target: One creature. Special: You receive an additional +2 to hit with this power if you have Combat Advantage. Hit: The target is stunned.
With the first use of the power I don't have combat advantage, I take the creature and stun him. Now I use an action point and use the power again. I now have combat advantage, and get an additional +2 to hit with the power. The effects of the first power have changed the effects of the second power.
Divine Challenge says "On your turn, the following must happen.". On your turn can be interpreted to mean at any point during that turn. Beginning, middle, end, etc.
[...]
The consequences of one usage of a power can clearly impact a later usage of that power. However, these consequences are an explicit part of the text that is evaluated for every single usage of the power. Each usage of the power can be interpreted solely within the context of the current game situation.
So, for instance, in your example with an additional bonus for CA, the line "You receive an additional +2 to hit with this power if you have Combat Advantage" does
not modify the power itself, it modifies the current usage. Just because you have CA
now, for this usage, doesn't mean the
power gains a +2bonus - just that single
usage. When you use the power again next turn you don't get a +2 to hit some other target you don't have CA against.
Similarly for divine challenge. Yes, the text is much more confusing, but that shouldn't distract from the fact that any given usage is to be read solely within the context of the game as it is at the moment that that usage is performed. So when the game says that on your turn you must do something related to the target of divine challenge (
impose a -2 penalty, smack em with radiant if they violate the mark, - oh, and engage or challenge someone else), you need to do that thing for any given usage of the power.
Every target gets the -2; every target gets radiant damage if they violate your mark; every target forces you to engage it or challenge someone else.