Personally I think Santorum and Newt need to form an alliance to take out Mitt, because if they both stay in, I believe they can prevent Mitt from getting over the delegate line. How they do this alliance would be hard to say, but they really need each other at this point. It was hard not to notice that Paul and Mitt have made their bed together, Paul helping Mitt to take down Newt in Iowa, and now Santorum.
If one of the two conservatives drops out, the other will certainly be left at the mercy of Mitt's super-PAC, and the tag teaming of Paul and Mitt.
Paul is practically withdrawn from Michigan yet has anti-Santorum ads there (clearly to help Mitt). Paul clearly wants either attention, or power, or both. He's creepy.
I like your analysis that both need to stay IN to fight off the Paul-Mitt alliance. There's been a lot of "he should drop out" talk for both Rick and Newt, and I don't agree with that at all.
They're the only conservative alternatives in this race, and we need them both to stay in and fight.