As far as this whole debacle goes: I find Leno entertaining, I find Conan entertaining, and I find Craig Ferguson entertaining. They all have their own styles. I don't really like Letterman, although a few of his Top Tens are entertaining.
NBC clearly feels that having Leno back in that time slot will help. I haven't really been watching any late night talk shows lately, but I'll assume they have a reason.
What I find annoying is how it was handled. Conan complained, as he rightfully should. But some of the Leno clips I watched are pretty aggressive about the thing. I feel that Leno should really have tried to stand by Conan, at least to a degree.
I am not saying Leno should have refused or resigned. Yeah, Conan took some cheap shots at Leno, but that is the nature of the Late Night comedy. Leno should NEVER have taken cheap shots at Conan. Mock NBC, but don't mock Conan. Because, as Peter David put it, "You can’t be the deposed king returning to power and court jester at the same time. Especially if you’re beheading the previous court jester."
When Leno returns to his spot, he might be able to make it work, that is up to him. But right now, he is just not in a position where he should make funnies about it.

Their reason is that their ratings are a disaster area. Conan wasn't doing horribly (about on par with Letterman in the 18-49 demographic), but Leno had been killing in that demo previously. They are grasping at straws to rebuild they prime time ratings, and decided to go scorched earth and put Leno back.
This does two things: 1) puts back a hosts with a better track record (and hope he hasn't become too damaged by the debacle). 2) opens back up 5 hours of prime time to fill with scripted (or, *shudder* non-scripted tripe) shows. It remains to be see what they will actually be able to fill it with. At least they have the Olympics to put on while they figure that out.
Yeah, I agree. The trouble is that Leno never really wanted to leave the Tonight Show. Secretly (or maybe not so secretly, after this past week), he really wanted Conan to fail. He made a few potshots, because he was expected to at least comment on it, then he tried to tell a story about the events that put himself in the best light.
I don't really blame him for any of this. It was a tough position for him to be in. Similar, in my thinking, to your best friend dating the girl that you have been secretly in love with. You really want to support your friend, but some part of you resents your friend and really, really wants the relationship to fail. The analogy isn't perfect (guy code might prevent you from moving in the girl after the break up, and it is questionable how good 'friends' Leno and Conan were), but it as close as I could come to framing Leno's mind.