Falling Icicle
Adventurer
It does specify a "power in your spellbook". Encounter attack powers are not in your spellbook, only daily attack and utility powers.
Many utility powers are encounter powers, such as Shield, and those are still prepared from your spellbook. Imagine a wizard that had prepared Shield as his level 2 utility power, used it duing a few fights, then using the mnemonic staff to swap it for Sleep. Even if you don't allow utilities to be swapped for attack powers, it would still be 100% legal to swap the Shield for a level 2 daily utility, like Feather Fall, even though you had already used Shield several times that day.
I guess this wouldn't be that terrible. After all, there are plenty of ways to get extra uses of powers. It's certainly not a game-breaking exploit, though I doubt it's what was intended.