It depends?

As the mark drifted downwind, the leg got shorter and shorter and boats coming from behind gained more and more. If it was only drifting very slowly this might not have been significant.
 

RRS 34  requires to race committee to remove or replace the mark in it's correct position if possible.

I think that, if it was possible in the existing conditions, the mark vessel should have gone in, picked up the mark, manoeuvered into the correct position, holding station with motor if necessary and displayed flag M with repetitive sound signals, even if this interfered with some boats.

Any boats whose scores were made worse could be given redress.

Alternatively, if the mark was only drifting slowly and it was apparent that no boat was gaining any significant improvement in her placing as a result of the leg getting shorter and shorter, and maybe if a large proportion of the fleet had already passed the mark, it could be left alone, the mark vessel could have recorded mark-roundings, and the RO could have ensured that the mark vessel at the next mark also recorded mark-roundings, compared the two records and considered requesting redress for boats whose scores had worsened.

Any of these are viable options depending on the situation.  Questions that will affect the answer include:

To John Christman
=> No RS Aero competitors had rounded the mark in very light conditions with a leg length of 800 m for the reach.
=> The competitors were about 1/4 the way down the reach when the first opportunity to move the mark arose.
=> The mark was drifting slowly in the light conditions and was about 100 m directly downwind of its correct position at the upwind end of  the outer windward leg of the trapezoid, when the course boat was in position to move it, or to use the 'M' flag and move it back to its correct position. The course boat may have incorrectly applied the guidance for change of course, i.e. not moving the mark when any yacht is on the leg approaching it to avoid disadvantaging any yacht.

Upon reflection on the rule
Rule 34 MARK MISSING
If a mark is missing or out of position while boats are racing, the race committee shall, if possible,
(a) move it to its correct position or replace it with a new one of similar appearance, or
(b) replace it with an object displaying flag M and make repetitive sounds.
A simple interpretation would be as follows ;
1. If the mark is still functional => move it back to the correct position, as soon as possible, perhaps towing it upright well behind a course boat, so it is clear what is being done
2. If it is missing, or has drifted far away, perhaps sunk or disabled, replace it with a new one of similar appearance in its correct original position
3. If the original mark or a replacement, is not available replace it with an object displaying flag M and make repetitive sounds.
Each of these has the same effect on yachts already on the leg(s) to the mark. 
Perhaps acting as soon as possible minimizes the overall disadvantage, as the further it drifts the more yachts are affected. 
Perhaps 3 provides a clearer direction to competitors of what has happened and its solution.

John Anderson, I think you may be overthinking this.

As I understand your later description, boats were about 400m from the mark when the mark vessel was in position to replace it.

RRS 34 tells us what should be done.  It says nothing about making clear to or providing direction to boats, or even not interfering with boats.

Repositioning or replacing a mark in accordance with RRS 34  is not changing a leg of the course as covered by RRS 33.

This is always a RC "Kobashi Maru" (No win scenario).  I agree the rules state to place the mark back in position if possible, so if a mark boat has time to fetch the mark and move it back, that's the best-case scenario. If not, you hope someone packed flag "M" on that boat as they become the mark. If another boat is available they can get the mark out of the water and back to its position.  Unless you get the mark set before the first boats round be prepared for a raft of redress requests. In a local series event we had this happen as boats rounded and no one had flag "M"  Each boat that rounded had sailed a shorter leg then those prior, so it was a mess.  

I'm surprised no one has mentioned the "nuclear option" - abandon the race.

Of course it goes back to the "it depends" answer that John Allan gave.  Every situation is different.

Oh, and I give competitors a 50/50 change of knowing what an "M" flag looks like, much less what it means.  In 20 years of doing this, I've seen it work exactly twice.

I think others have covered the "it depends" options pretty well. I would add a couple personal thoughts on using the M flag, as I agree with Matt B on the 50/50 nature of the beast:

Personally, I would only want to use the M-flag under certain conditions, where sailors would not be confused between a still-visible mark and the boat with the M-flag:

In the situation described, I would have been aiming for one of the following outcomes:

I personally would NOT want to use the M flag in the following conditions:

The mark would have to be drifting REALLY, REALLY FAST - and a large gap between any two boats - for the shorter sailing distance to make a significant change in the relative positions of the boats.
Let it drift till all the boats are around.