Jon Fleischman takes a look at the SD-23 special election. Fleischman is a good read on the subject. Fleischman speculates that a primary would be in April and a run-off in June. This complicates things for Mike Morrell and Republicans' desire to retain his assembly seat. The filing deadline for the June primary is March 7, which is likely before the primary. Even if it isn't, the election will almost certainly produce a run-off. So the filing deadline will hit while Morrell is not only still in the assembly but at a time when he won't know if he'll win the senate seat.
Morrell could file for re-election for the assembly. This'd be the safe route and would likely put him on the ballot twice in June. He'd need to campaign for both seats, but this might backfire on him as his opponents can present him as not being fully committed to either. The following things could happen:
Morrell fails to finish top two - The result here could be two Democrats finishing top two, giving the seat to the Democrats in the fall.
Morrell finishes top two but wins the senate seat - I'm not sure what happens, but I assume he'd drop out of the assembly race and the third place finisher would be top two. Considering Morrell's popularity it's likely that a second Republican would finish no better than fourth and two Democrats might finish in the top three. Again this'd mean two Democrats going to the November run-off.
With both of these scenarios possible, the best decision for the Republican Party is for Morrell to not run for re-election. Morrell, however, might want to have a fall back. So which way will he go?
Edit: Scott Lay pointed out to me that Section 8803 of the California election code seems clear that Morrell couldn't drop out after placing in the top two. So Morrell winning a spot in the top two and winning the state senate campaign would hand the election to Democrats.