I think it will now be difficult for any of the two parties to be excited about it. Alonso hasn't been particularly impressive in the first races of the season and Ferrari is in bad bad shape. If it happens, they will have to offer him a hefty salary and even then, they will need to work very hard and have a little bit of luck to bring Ferrari back to the front.
Alonso will require number one status, that is obvious by now. That is a problem considering that Massa is naturally fast and Alonso seems to crack when his teammate is in good shape. I don't really think it would be succesful partnership but what choice do they have. Both parties seem to have no better choice right now. Unless Vettel can break free, that is.
It would be hilarious if they ended up having an Alonso - Piquet lineup. At the same time, I would feel bad for poor Nelsinho for not being given a chance to not be a number 2 for once in his career.
Edit: @Firefox: It's true that we must take into account what rosbif calls the 'Ron effect', which probably affected his laptimes, particularly after Belgium 2007. But I'm actually talking about races like Canada 2007, where he just seemed to make one mistake after another and it was also when Hamilton got his first pole position and victory.
Alonso is still a tremendous driver and I really hope he can bring Ferrari back to the winning days, I just wouldn't put my money on it. It would be awesome to see him battle Hamilton in a Ferrari, causing more Senna-Prost flashbacks but hopefully without all the controversy.
I think that given a couple more years, Vettel will be the driver that Ferrari needs. He seems to be more into the mechanical side than many other drivers that are more experienced than him. An Alonso - Vettel line up would probably produce the ultimate car but then it would also be a little self destructive.