Not entirely correct. Congress, by majority vote (but not two-thirds) voted to exclude Powell from Congress and declare his seat vacant. Powell didn't challenge Congress' authority to do this, but rather claimed that this was tantamount to an expulsion, which requires a two-thirds vote. The Court agreed.
Assuming that the Senate could garner the two-thirds vote, it could refuse to seat him. No sweat.
It'll never happen in this case. Justifying that vote will make them sweat, and we all know how much senators hate that smell.
if the Senate refuses to sit him, then Illinois will be without a senator until 2011.
The constitution clearly states the Governor shall appoint a successor to Senate in the absence of any law passed by the state legislator. However, since Obama resigned prior to any law restricting the Governor to make appointments, any law restricting Blago would be unconstitutional since it would be both a bill of attainder and post facto.
I think the republicans should refuse to vote on this, thus denying the senate democrats their 2/3rds vote.