The previous post in relation to this chapter was "Leaving Ephesus."
2 Corinthians 1-7 breathe the relief Paul felt on hearing that the Corinthians had submitted to his authority. The thanksgiving section (3:1-11) remarkably uses some variation of the word "comfort" ten times in this short space. It is no surprise that 2 Corinthians has some of the most encouraging words in Paul's letters.
Whether you accept an Ephesian imprisonment or not, Paul clearly left Ephesus with a strong sense of hardship and oppression there (e.g., 2 Cor. 1:8). We do not hear the resolute Paul of Galatians in 2 Corinthians, but a Paul who has almost been second guessing himself. His language has become very polarized between the circumstances of his "outer" body and what is true of his "inner" spirit: "We have this treasure in clay jars, so that it may be made clear that this extraordinary power belongs to God and does not come from us" (4:7).
The verses that immediately follow this one are some of the most uplifting in the Bible in a time of crisis: "We are afflicted in every way, but not crushed; perplexed, but not driven to despair; persecuted, but not forsaken; struck down, but not destroyed; always carrying in the body the death of Jesus, so that the life of Jesus may also be made visible in our bodies. For while we live, we are always being given up to death for Jesus’ sake, so that the life of Jesus may be made visible in our mortal flesh" (4:8-11). "So we do not lose heart. Even though our outer nature is wasting away, our inner nature is being renewed day by day" (4:16).
2 Corinthians also has some of the most ironic language in the New Testament when Paul says, "thanks be to God, who in Christ always leads us in triumphal procession, and through us spreads in every place the fragrance that comes from knowing him" (2:14) The Romans led a string of those they had conquered through the streets of Rome in triumphal procession. The imagery here is thus turned on its head. Paul is being led in triumphal procession, a picture of defeat, of being conquered. Yet his persecution in the world is a sign of God's ultimate victory and judgment of the world.
The contrast between Paul's "outside" and his "inside" corresponds with the contrast between his present and his future. And the key to that connection is the Holy Spirit. For Paul, the presence of the Holy Spirit inside a person is the key moment in moving from death to life. The Holy Spirit is God's seal of ownership, the key indication that a person in fact belongs to God (2 Cor. 1:22; cf. Rom. 8:9). And the Holy Spirit is also both a guarantee and a downpayment of a believer's coming inheritance (2 Cor. 1:22; 5:5). And because of the Holy Spirit, we are "being transformed into the same image from one degree of glory to another; for this comes from the Lord, the Spirit" (3:18).
The word that Paul uses of the Spirit in 1:22 and 5:5 is arrabon, a term perhaps best captured by the notion of earnest money. When people buy a house, they put down earnest money, which serves both as a guarantee that they will acquire the house and as a downpayment toward the purchase of that house. So also the Holy Spirit is both a guarantee of salvation and a "foretaste of glory divine." When we have the Spirit, we know we are headed for salvation, and the Spirit inside us gives us a sense of what the kingdom will like.
It is apparently Paul's recent crisis that has pushed him to drive such a strong contrast between our current embodiment and our spiritual identity inside. Indeed, some have gone so far as to suggest that Paul's very thought has developed here since he wrote 1 Corinthians. Although most do not agree, some wonder if in 2 Corinthians Paul now sees us getting a heavenly body immediately at death, rather than in the future at the time of the resurrection. The same shift might then apply also to Philippians 1:23, where we seem to go directly to Christ at death. 1 Thessalonians 4 and 1 Corinthians 15, by contrast, at least use imagery of sleeping until the future resurrection.
But in 2 Corinthians 5, Paul talks about an "eternal," "heavenly dwelling" ready and waiting for us if "our earthly tent" is destroyed (2 Cor. 5:1-2). It is generally agreed that Paul is talking here of our current physical bodies and our future resurrection body. For us to be found "naked" then, would seem to mean God has not found a person worthy of resurrection, and a person does not receive a resurrection body (5:3). Like Philippians, to be away from the body is to be "at home with the Lord" (5:8).
It is difficult to know whether in fact Paul's thought has developed here or not. Certainly most Christians on a popular level probably assume that we go to heaven immediately at death in some sort of spiritual form. But this has not been the historic position of Christianity nor is it Paul's position in 1 Corinthians or 1 Thessalonians. In these letters, our resurrection body must wait until Christ's future return. Historic Christianity has also affirmed at the same time that we are still conscious between our death and resurrection as well. These are thus the best positions for us to adopt, even if the biblical texts at times are ambiguous.
Another statement Paul makes here that is troubling for some is in 5:10: "all of us must appear before the judgment seat of Christ, so that each may receive recompense for what has been done in the body, whether good or evil." Paul makes this comment to believers, not to unbelievers. In other words, he tells believers that they will have to give an account for their "works," something he also implies in Romans 2:6-10. 1 Corinthians 3:15 also holds out the prospect that some believers will be saved, "as through the fire." Even though it is not popular to think so, Paul does believe our works play a role in our final judgment and even justification (e.g., Rom. 2:13).
Paul's (supposed) reconciliation to the Corinthians reminds him of the very nature of his mission, commissioned by Christ himself. "In Christ God was reconciling the world to himself, not counting their trespasses against them, and entrusting the message of reconciliation to us" (5:19). This was the mission of God in Christ, to bring about the reconciliation of an alienated world back to Himself. Christ, then, sent Paul and the other apostles in turn: "So we are ambassadors for Christ, since God is making his appeal through us; we entreat you on behalf of Christ, be reconciled to God" (5:20). 
This magnificant passage then climaxes in 5:21: "For our sake he [God] made him to be sin who knew no sin, so that in him we might become the righteousness of God" With our Protestant eyes, this verse reads like a straightforward switch. Christ had no sin, but took on our sin. In return we who have sin take on Christ's righteousness.
But it is not at all clear that Paul had this meaning in mind. The phrase, "the righteousness of God" was a known concept within Judaism, found in the later chapters of Isaiah, certain Psalms, and even among the Dead Sea Scrolls.  In these places, God's righteousness refers to the part of his character that leads Him to reach out and save His people, even when they are sinful. And, indeed, it is exactly this subject that 2 Corinthians 5 has just been discussing--God's propensity to reach out to His people and the world with the offer of reconciliation and salvation!
So it is more likely in terms of Jewish background, that Paul is saying that Jesus became a sin offering, atoned for our sin, so that we might become a proof of God's righteousness (cf. Rom. 3:25-26).  As counterintuitive as this interpretation might seem, it seems the most likely reading when we read these words in their ancient Jewish historical context. It is thus hard to find a clear passage that says we assume Jesus' moral righteousness or goodness, despite the popularity of this idea.  There are passages where he functions as a sacrifice (e.g., Rom. 3:25; 8:3). Certainly we are pronounced "righteous" or "innocent" by God on the basis of Christ. But nowhere does Paul or any New Testament author clearly say that God ascribes to us Christ's moral righteousness. This view seems to be based on a very legalistic sense of God as a judge that seems to find little real basis in the biblical text.
This ministry of reconciliation, to which Christ called Paul, to which God called Christ, is a ministry of the "new covenant" (2 Cor. 3:6). The old covenant was that God made with Israel through Moses. It had a glory, but it was a fading glory (3:7). Paul allegorically re-interprets the veil on Moses' face to signify the fact that the glory was fading. Moses' veil kept Israel from seeing the glory of the old covenant fade (3:13).
But the glory of the new covenant in Christ does not need such a veil. The glory of the Spirit of the new covenant is unfading but in fact is ever increasing in glory (3:18). And it is for this glory that the people of the new covenant are destined, regardless of any current troubles or persecutions.
 The "you" in 5:20 is an interpretation rather than something in the original. Some think the sense is, "We ask on behalf of God [to people in general], 'Be reconciled to God.'"
 N. T. Wright is best known for this interpretation. Cf. Climax of the Covenant ***
 Wright's positions on these sorts of things may sometimes be a little too stark (i.e., he tends to resist the possibility of exceptions to generalizations of this sort). Nevertheless, his book Justification is where he deals most extensively with the question of "imputed righteousness" from Christ, that is, the idea that Christ's moral righteousness is ascribed to believers in order to satisfy the justice of God in acquitting us. We do not believe Paul was this legalistic in his sense of God's justice.