Will it be seen as a defeat for Harper?
Can Dion survive by simply increasing the seats he holds?
Internal Conservative Party discipline would crumble if the Conservatives stood still or lost seats, and Harper would probably be gone within a year. As for Dion, I'm not sure if the Liberals have yet developed the political spine to oust him if the Liberals fail to become largest party (which they likely will not manage but it doesn't look impossible any more). If they do, it will be Michael Ignatieff who becomes leader, and he would almost certainly win the subsequent election (although probably only a minority; it's difficult to imagine majority governments as long as the Bloc and NDP and Greens are strong and the right isn't splintered).
Why would the conservatives fall apart in the event of this?