So, if Davis resigns, and Bustamante becomes acting governor, is he then also ineligible for the replacement election (as Davis would be if doesn't resign)? IOW, if Davis quits, and the recall succeeds, could Bustamante graduate from acting governor to governor if he wins a plurality in the second question? Also, if Davis resigns, would he then become eligible to run in the replacement election?
First question: Yes, Bustamante could go from Lt. Gov. now, then to Gov. after Davis quits, THEN "graduate" to serve the rest of Davis's term if the recall succeeds and Bustamante gets the plurality on question 2, as I understand the law.
No on the second, if only because the state constitution says that no governor may serve more than "two terms" -- not, by way of contrast, no more than "two FOUR YEAR terms." And Gray's second term would end immediately if the recall (question 1) passes.
Because the recall election petition has qualified, and because an recall election has been scheduled, if Davis quits now, Lt. Gov. Bustamante would become, in effect, the acting Governor of California until the results of the recall election are certified. If the already resigned Davis "wins" the recall, Bustamante would become the full-time Governor immediately (because the office is vacant). If Davis "loses" the recall, but candidate Bustamante wins the plurality, Bustamante would become full-time governor. If Davis "loses" the recall, and someone other than Bustamante wins the plurality, Bustmante would revert back to Lt. Governor.
Although it is not well known, under California law, anytime the Governor is out of the State, the Lt. Governor is Acting Governor, with all the powers and responsibilities of the office.