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I think it is interesting that the rumor has dropped off considerably -- I know possible picks of Geithner, James Jones as NSC, and Richardson at Commerce are hotter rumors currently, but I wonder if the reaction from AZ might possibly have had some effect.
The true issue at DHS isn't setting policy on borders or knowing terrorism -- it is really more of an organizational job -- chore -- nightmare -- at this point. Since the one part of DHS everyone seems to like in theory is the integration of training and tech at a local level, and at the Israel CT conference they even mentioned Arizona's fed-local DHS program being one of the half-dozen decently-functioning arrangements in the country, in organizational and operational terms Janet probably has some clue what the lumbering boondoggle needs.
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"The power of the State looks real different when you're on the other side of the bayonet." Chris Hayes
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