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.
"The power of the State looks real different when you're on the other side of the bayonet." Chris Hayes