With Delicious in purgatory, can anything bring the trend-setting social bookmarking site back to (even half of) its former glory, pre-Yahoo? Some are showing interest in buying it. Sources say Yahoo is going to get around to considering how to unload it in January. In the meantime, it’s just sort of… there.

News that it was on the chopping block really put a dent in the site’s ability to stay relevant. Users have scrambled looking for a new place to store their bookmarks. Former employees are speaking out. The founder is willing to “help” but not willing to buy it back. What do they need to do to stay alive?

It’s not up to them. Yahoo itself must do whatever it takes to keep the site alive, and if that means taking much less than the $15 million offer they passed on last year, so be it. Investors are looking at it as a sub-$5 million purchase, which isn’t enough to scratch an itch amongst Yahoo’s other financial pains.

And yet, they must.

Yahoo can actually turn this around. They can make it a good thing. They can do it right and make sure that Delicious transitions over to new owners smoothly as well as help to promote its health and help to nurse it back into shape. They can take their losses now and make gains as a result later.

How? This can turn into a major debacle bigger than they anticipate if Delicious dies. Companies with passionate founders may start shying away from considering Yahoo as a suitor if they build a (bigger) reputation as a “killer of once-great things.” But, by building up Yahoo and turning the situation into “putting the company into a better situation with the right fit” even at some financial loss on their end, they could save some face.

Oh, and they would also be helping to save one of the first powerful social media sites that was doing great until they decided to touch them with their wicked, sickly hands.

Kevin Rose Should Step Up and Step In

While most would question the direction that Rose’s original startup, Digg, has taken in the last year, few would question his visionary’s ability to take a concept and make it great. Pownce and WeFollow were both promising with excellent concepts. Pownce fell to the Twitter machine (which even Rose admitted he used more) and WeFollow demonstrated relative success.

What Rose could do with Delicious is the most intriguing case out there  for the survival of the site. It’s small enough that he could probably be the major money behind it, leaving creative and directional control of the site in his hands (some speculated that he was moved in certain directions with Digg based upon investor intervention). What would that mean for the site?