Weigh it in the balance. On one side, all the liberal faculty and media will scream. On the other side, the university risks trashing its reputation and offending a lot of rich alumni.
They will do whichever involves taking the least heat. At this point, I think that means firing him, for lying on his job application, bad scholarship, and plagiarism.
The public universities are run by like minded indivduals such as Ward Churchill.
It will be interesting to see how this developes.