He needs to go. Even if we churn the bad eggs, the younger part of the squad will be left with that lasting impression. They will never respect Poch fully as they've observed his weaknesses during this period. They know they will be allowed to be rebellious and give less than 100% when their turn comes. Poch has lost his own principles that set him up so well in the early days.
Despite the many root causes, that don't shine a great light on the chairman either, we need to ring fence the Poch ones and then it's a non-emotive and easy decision in my book. Look forward, not back.
As for new managers, draw up a shortlist of 3 or 4 - mine would be Rafa, Allegri, Espirito Santo and Gallardo. The safe hands of the first two and the potential of the second two.