i think wolfie is toast this time. i mean, you can't make anti-nepotism/corruption the centerpiece of your agenda at the same time that you get your lover a raise, then get her a job in the state department while keeping her on the payroll at the place you work.
i predict that wolfowitz will resign or be fired relatively soon. but i have no doubt he'll land on his feet though. he's got nice connections to the bush administration. which only heaps another scoop of irony onto his anti-corruption credentials.