Update: Apparently, he also met with Bill Richardson today, so either he hasn't actually made a decision yet or he's waiting to see what Clinton decides with Richardson as a back-up. The Huffington Post is awfully misleading about all this...
As a great admirer of Hillary's, this seems like an amazing position for her, but I understand the quandary she might face weighing the Secretary of State position against her goals in the Senate for the following years (vis-a-vis health care, etc.) and her possible bid for the Presidency in the future (not that being Secretary of State would necessarily hurt that chance, but it's a different avenue to take). That said, as Secretary of State she would have a lot of influence, power and political clout, not to mention a great deal of exposure. I'm eager to hear what she'll decide.
A quote from an earlier article speculating about the possibility:
"She is a beloved figure around the world. She has visited over 80 countries, as first lady and senator together," the assistant said. Noting in particular the fact that she learned as first lady how to be effective as a "backdoor diplomat," the former White House assistant said Sen. Clinton actually mastered "a lot of the intricacies of these issues before ever joining the Senate's Armed Services committee. She's tough; she had meetings with some Prime Ministers and Presidents where she had to deliver some blunt messages for us."
And there is one other symbolic reason why Obama might go the extra mile to convince Clinton to come on board, the former assistant said. "He would be choosing a very high ranking woman to be one of the faces of this country all over the world. This is the first woman's name that has come up, by the way, for one of the top four cabinet posts. So she gives him this great political asset. And she and Biden are really tight. So I wouldn't be at all surprised if Obama offered it to her."
He's also named friend and top campaign adviser Valerie Jarrett as a senior White House adviser.