I see Hall as being so vulnerable because what he represents is basically a RINO district but still conservative enough to vote for Bush. A more moderate Democrat could certainly hold it, but Hall is one of the most liberal members of the freshman class, and the GOP bench is pretty deep. I've seen Hall as likely to hang on only if the GOP ends up nominating a Bachmann-esque candidate, could be wrong, but we'll see who they run.
The district went for Bush by about 2000 votes in 2000 and went for Clinton handily in 1996. The district is trending Dem and Republicans are unlikely to get it back.
Also, Democrats are likely to extend the district into the Bronx in the 2011 redistricting and shear off a good portion of the marginal Orange county. This would essentially wipe out any chance of the Republicans holding the seat as it would add a good chunk of territory that votes about 90%-10% Democratic.
Only if the Dems control the NY State Senate after the 2010 elections. If that does not occur, then such blatant gerrymandering is extremely unlikely.