Personally, I think he should have his ass nailed to the wall, and force-feed him some crow. It irks me that he's being allowed to have some say here, claiming he'll bolt if he loses his chairmanship.
The problem is that we need every vote in the Senate right now. If we stomp Liebermann, he's either going to 1) resign, and Connecticut's Republican governor will put a Republican in Liebermann's seat, thus we lose that vote indefinitely, or 2) Bitter Joe will seek revenge every opportunity.
If we do nothing, I predict Joe will continue to use the pulpit. For instance, as Chairman of the Homeland Security/Government somethingorother Committee, Liebermann opted to not investigate Katrina and Blackwater shootings in Iraq, where his counterpart in the House, Waxmann, was for investigations.
More troubling is this collection of information on Liebermann's backslide from progressive views, the way he's behaved over the last few years.
What I would like to see happen, nailing him to the wall is not the ideal solution, to take his chairmanship away and put him somewhere he can do some good. Liebermann apparently feels very strongly (and progressively) about technology and the environment. So putting him as a chairman of one of those committees would be useful. But as I pointed out above with regards to the backslide from progressive stances, it may be too late.