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I would strongly disagree with “states rights” being in any way a libertarian position.  If it is, that would imply that only people living in the United States can be libertarians. Libertarianism is a philosophy about the proper role and scope of all government (not just the federal government), and one can be a libertarian even if one thinks that state governments should not exist at all. 

The position that Ron Paul and many of his non-libertarian supporters adopt would be more accurately described as “Constitutional Conservatives” (which, unlike libertarianism, is a philosophy unique to the United States).  Constitutional Conservatives are libertarian at the federal level (and I think this is what prompted Steve and Jen to call this a libertarian position), but believe that the states pretty much have unlimited power (the common phrase that is used is that they should be “50 laboratories’).  No libertarian would say that the states have unlimited power. 

I appeared on Steve’s show several times as the Libertarian candidate for Governor of Iowa, and I never make the argument that the states should have unlimited power, but rather applied libertarian principles at the state level (which indeed is what every Libertarian candidate for state office does).