Does this set precedent? Not in the legal sense; it's not a verdict but simply a restraining order, and it's not from an appellate court. But politically, it probably does. It would be interesting to explore how much judges have done this.
It seems I was wrong. In POWELL v. McCORMACK, 395 U.S. 486 (1969), SCOTUS overtuned the House's refusal to seat Adam Clayton Powell, deciding that while the House had the Constitutional authority to judge "the Qualifications of its own members" (I.5), that was all they could do. They could decide whether he was 25 years old or not, for example, but not whether he didn't have the character to serve. A duly elected Representative could not be unseated for reasons other than those explicitly in the federal constitution.
Other Freepers may know better, but it looks like that is the controlling Federal law.