That pesky application.master just doesn’t match you pretty, custom master page so what are you to do? Visit this blog: http://www.sharepointblogs.com/dwise/archive/2007/01/08/one-master-to-rule-them-all-two-actually.aspx and get to developing a httpModule which will return a custom application master page when the standard aplication.master is requested. In practise, this is a great, long term solution to this problem which avoids modifying the MS supplied application.master.
Alternatively, rather than re-inventing the wheel, you could check out the Dynamic SharePoint Rebranding Module : http://www.codeplex.com/DSRM which seems to have some pretty handy features such as query string initiated branding e.g. ?printpage=true. I haven’t used this myself as yet so I would be interested to hear how it goes if you do give it a whirl.