I have heard that the Gov selects the replacement, that is usually the way it goes, not sure if the "maverick" state of Alaska does this differently or not. I heard she could not as Gov select herself for the seat, although she could step down as Gov and allow her lieutenant Gov appoint her to the seat.
As far as being a convicted felon and serving in Congress, believe it or not there is no law against that! So, if Alaska elects him he can theoretically serve, however, the Congress ethics rules would seem to dictate that Congress act and remove a convicted felon from the body. It would seem if he does not resign he may get forced out anyway.
What I find ironic is that he was convicted for having his home remodeled by contractors for free, an under the table "favor" to the tune of $250,000, but if you recall Palin has a new house that Todd said he "built with his contractor buddies" right before Palin signed the contracts to build a giant new sports complex in Alaska. This house seems to smell a lot like the Ted Stevens deal, if they put Palin in this seat they just be setting themselves up for round 2 of the same shit. Anyhow, it doesn't matter if Stevens, Palin, or Carl Rove hold that seat for that matter, it's just one reliably republican seat and no matter who sits in it the vote is gonna be about the same...
But I hear ya' about them actually electing a convicted felon. James Trafficant was convicted of felonies and the House voted 420 to 1 to expel him, later he ran for Congress again FROM prison! LOL If he won he would have served from jail apparently, but he would most certainly have been expelled again by the House. He certainly was a colorful character, I will never forget the day he took the podium and said roughly, "I know you guys all talk about me, asking questions like "does he do his hair with a weed whacker?" LOL
Irie