Two own goals
The first consideration is if it will pacify the Occupiers in the street. Occupiers see the occupied areas as public spaces they fought for and have defended; they will not easily give up their accomplishment. The Movement has no identifiable leadership. The gesture by an old-school democrats might have at best an insignificant effect on the occupiers.
The second consideration is historical precedent. The de facto referendum in 2010, so to speak, was an utter failure. The 17.1% voter turnout rate in the 2010 by-elections shows that pro-democrats lacked the capability to mobilise voters. In the by election of 2007 on Hong Kong Island, the voter turnout was 52.1%. It is reasonable to conclude that not only did the democrats fail to mobilise voters, they lost the support from some middle-of-the-road citizens. In the 2012 elections, pro-establishment and pro-democrats has a 45:55 split on votes count and it is clear that the pro-establishment has a much stronger electoral machine and execution.
One must bear in mind also the fact that the Democratic Party did not take part in the 2010 campaign, but later provided support to the candidates in the by-elections. Since the 2010 campaign, the more vocal and extremist faction of the democratic camp used that as the reason to attack the Democratic Party. I am not sure whether an Albert Ho resignation can change the way the radical faction sees the party.
Own goal hat trick
Most importantly, should Albert Ho resign, the by-election for the District Council functional constituency will bar approximately 200,000 voters who already signed up for other functional constituencies from voting. Traditionally, the democrats have strong support from sectors such as the legal and education sectors. Without the support of these sectors, the Albert Ho gambit could turn out to be a surprise defeat if the pro-establishment camp manages to field a reputable candidate. It will then be an embarrassing moment not only for the Democratic Party but the entire movement.
Therefore, the Democratic Party is proposing a re-run of what the democrats did in the 2010, i.e. five legislators from five geographical constituencies resigned and they called the by-elections a de facto referendum. It will be a safer option for the Democratic Party, as the broader pan-democratic camp will ideally contribute manpower and money to the resulting election. A five-member resignation could risk undermining the veto power the democrats have on the issue of constitutional reform, if not all were returned in the by-election..
It is clear that both the democrats and the establishment want to bring the issue of constitutional reform back to the institution built upon representative, electoral politics. I am curious to know how to pro-establishment will respond. It seems however that the pro-establishment would not take part unless Beijing explicitly green light it and it is unlikely for Beijing to give any legitimacy to anything that hints at being a referendum.
Therefore, pessimistically I foresee no escape from this quagmire using this ploy.