There is an emotional component to this race that I don't think the democrats have realized. Arnold's candidacy is being viewed by a fairly large number of voters as that of a hero who will rescue them. I think a lot of them feel like they are participants in one of his movies, in a way...a larger than life hero rides to the rescue, etc.
To snatch that away from an excited population is not a good tactic, in my opinion. If they do so through a resignation and court cases, the democrats will find that they have really stirred a hornets' nest.