Perhaps she could not be legally placed on the ballot, but the electors who are on the ballot would be free to vote for her instead of Kerry.
Withdrawing Kerry would only ensure further chaos in the DNC.
Hillary could have stepped in at any moment right up to the convention, but she has left it far too late to be recruited to save the party.
It's one thing to replace a candidate who dies or becomes seriously incapacitated during the campaign; it's quite another to replace one just because he's proven to be undesirable.
Oh yeah, remember New Jersey. That exact thing happened there.
Ever heard of Arkancide?