USC athletic director Pat Haden reinstated Kevin O’Neill this morning. He also mentioned “a fine,” in addition to further discipline as part of the punishment for his verbal altercation with an Arizona fan. This does clear up the issue of whether O’Neill would be fired.
Here’s statements from Haden and O’Neill.

Effective immediately, I am reinstating Kevin O’Neill as our men’s basketball head coach.

“Coach O’Neill and I have talked numerous times these past few days. He has continued to express his regret and embarrassment over the incident that led to his suspension from any remaining games of the Pac-10 Conference Tournament. He understands that his inappropriate actions and resulting suspension from the tournament’s semifinal game and potential championship game put his team in an extremely difficult position. Further, he understands that he let them down as their role model and leader. He has apologized to his team, as well as to me, our administration, our fans and the Pac-10.

“It was a difficult lesson for Coach O’Neill. I believe the suspension served its purpose and will eliminate any such inappropriate behavior by Coach O’Neill in the future. Although he has been reinstated, Coach O’Neill knows that he still faces additional institutional discipline and a fine.

“Our players were the innocent victims in all this. I was proud of how well they and our assistant coaches responded in our Pac-10 semifinal game. We now need to provide our players with the best chance of moving forward through post-season play. Having their head coach back gives them that opportunity.

“I said this before: Kevin O’Neill is a good person and a very good basketball coach. He made a mistake and paid the price. I look forward to working past this issue with him. I am confident in his ability to produce winning basketball teams at USC. He has my support.”

KEVIN O’NEILL QUOTE:

“I’m excited to be back coaching the Trojans and I am looking forward to the post-season. This is a special team and we have shown that we can compete with anyone in the country.

“But I temper my excitement of being reinstated with the realization that I made a serious error in judgment the other night. The disciplinary measures that Pat Haden took, including the suspension, were absolutely the right call. My wife, Roberta, and I are both very apologetic for the embarrassment we caused the Trojan Family. We vow to move forward in a positive manner.

“I appreciate the support I received from our administration, the Pac-10, my coaches and players and our fans. I cannot apologize enough to them.

“I was really proud of the effort our team put forth in Friday’s game against Arizona. I know I let them down and put them in a very challenging situation. But because our players are high-character young men, they were able to put that aside and compete extremely well.”