UPDATE: Bustamante can't appoint himself Lt. Governor
I received a private email which indicates that Bustamante, if he became Governor, could not appoint himself Lt. Governor. Article V, Section 2 of the California Constitution states that "The Governor may not hold other public office." Hence the Governor is not eligible to appoint himself to any other position, and Bustamante could not solve the dilemma I pointed out below. I'm not convinced that Bustamante is entirely prevented from appointing himself Lt. Governor, since he wouldn't actually become Lt. Governor until the state legislature either confirmed him or refused to reject him, and that could be after the newly-elected governor had already taken over the office. But that's really stretching it, and the courts could easily decide against Bustamante.
So here's a likely scenario: On election night, during Davis' concession speech, he tearfully proclaims that he will not remain governor for one minute longer in view of the people's decision, and he resigns on the spot. Later on Davis could pretend that he didn't think through the implications, but it would be too late. Bustamante would already be governor, and soon thereafter he would be nothing.
Will Davis retaliate against Bustamante?
After the Democratic Party desperately attempted to maintain a united front against the recall of Gray Davis, by pressuring every prominent Democratic to keep his or her name off the replacement ballot, Lt. Governor Cruz Bustamante finally broke ranks. Bustamante's entry into the race has dramatically reduced Davis' hopes of surviving the recall, since Democrats will now have an alternative and an opportunity to retain the California governorship.
Davis has never been on good terms with Bustamante. Davis now has reason to be especially pissed with Bustamante. And having Gray Davis as a bitter enemy just might end Cruz Bustamante's political career.
Suppose Davis loses the recall, and suppose a Republican is elected to replace him. Davis would then have a golden opportunity to retaliate against Bustamante by resigning the governorship a few days before he was officially replaced. Bustamante would automatically be elevated to the position of Governor for that brief time, and the position of Lt. Governor would become vacant. After the Republican was sworn in as the new Governor, he would then be able to appoint someone else as Lt. Governor to fill the vacancy. Of course the Democratic state legislature could reject that appointment, but Bustamante would still be out of office.
The only flaw I can think of is that Bustamante might appoint himself as Lt. Governor during the time he was Governor, and the state legislature would likely confirm him later on. Unless, that is, the new Governor could rescind the appointment and appoint someone else. Or Davis could submit his resignation just a few minutes (or a few seconds) before his official departure, to catch Bustamante by surprise so that Bustamante wouldn't have time to re-appoint himself Lt. Governor.
The result: Cruz Bustamante finds himself out on the street as a private citizen, with his political career in tatters. Just like Davis.
Could Gray Davis really be that vengeful?