Honestly, I think saving Reddit is entirely possible. Content is king, and if anything, this drama is just generating more content for people to consume when they browse /r/all looking for drama. Reddit is still a hugely popular site, and outside of some of the default subreddits, most people aren't going to see/care about these types of changes until it affects Reddit as a whole.
It really comes down to whether Reddit as a company can continue operating without instituting some broad changes that drive away users (pop up flash ads, etc). But the site is still running strong. The difference between Digg and Reddit is that most of this Reddit drama is around stuff mostly unrelated to using the site on a daily basis. If you only browse /r/games, you would never even know any of this was going down. Whereas with Digg, it was changes/policies that affected every single user of the site in obvious ways.
How do you generate good content when half of the story is your website and whether or not your content will be visible (blackout). When the front page for weeks has been dominated by "chairman Pao", blackouts, and long missives about the staff, the rules, the backlash, all you have is drama .