The Hotline's blog Hotline on Call reports (and here) that a leadership election is probable. It's not good for DeLay, as it means he loses his leadership position.
Will DeLay still want to run for re-election if he isn't in the House leadership anymore? He'll still be on Appropriations, I believe**, so he'll certainly still have power within the House. If re-elected, he could possibly weather the storm. But many officeholders have decided to come home when they lose their leadership position, because Congress doesn't seem nearly as interesting as before.
** DeLay isn't on any committees right now, because he's Majority Leader, but I believe his slot is reserved on Appropriations.
If DeLay does retire: If DeLay were to drop out now, then there would be the three remaining candidates to vie for the GOP nomination. If DeLay wins the primary and then retires, then the state party would choose who would run on the GOP ticket.
DeLay has acted in the party's best interests over his own before. Instead of running for Speaker post-impeachment, he chose to remain majority whip because he was too "radioactive." Perhaps he was just counting votes, but he didn't put his colleagues through a difficult choice at that time. He supported Hastert instead. So it is quite possible that DeLay will at some point choose to step down from his leadership post, despite the fact that it would be a large blow to his power.
Bennett Roth from the Houston Chronicle has quotes from a senior GOP leadership aide (there aren't many options for who this is):
"Under the current circumstances, with the (Texas) indictment and the now ballooning Abramoff scandal, there are very few members eager to see DeLay back in the leadership post," said a top aide to a House GOP leader.Gingrich has also been calling for DeLay to step down as majority leader, though that's not too surprising, as DeLay and Gingrich are...not particularly close.
The aides spoke on condition of anonymity because the leadership has yet to decide how or when to broach the matter of electing a permanent leader.
Gingrich, still an influential voice in the GOP establishment, said he is among those concerned about the fallout.
"You don't have to render any judgment on Congressman DeLay to conclude that over the next six or eight months, he is going to be very busy and that it's important for the House Republican Party to have an effective majority leader," Gingrich told reporters.
If members do not want DeLay to reclaim his post, they could force a new election by gathering a petition with the signatures of 50 lawmakers or convince DeLay that he should relinquish the position.
Of course, it's also possible that nothing will happen. DeLay has certainly persuaded his colleagues before; they might give him another few months. Time will tell.