Democracy in Egypt is probably a bad idea, for reasons discussed by Razib Khan. On the other hand, sticking to Mubarak would have been a bad idea too.
Who really knows where Egypt’s popular enthusiasms will lead it, but surely it is a good idea for the US to minimize its investment in Egyptian domestic politics, one way or the other. If abandoing Mubarak et al damages “alliances” with Saudi Arabia or Ethiopia, perhaps it is worth asking how much those alliances are worth.
No authoritarian (or for that matter democratic) ally of the US could look at the last sixty years and believe that Uncle Sam will be there for them no matter what happens domestically. If you take the Yankee dollar, you have to know it comes with no lifetime guarantee — and if you don’t, the shades of Diem, Marcos and Pahlavi will set you straight.
It’s way too late for the US to develop a reputation for greater constancy, and I’m not sure it would be a good thing anyway. While I’m grateful for the relative peace and prosperity American hegemony has brought, I think it is more sustainable in the long run with a lighter touch. Not every regime in the world is going to be pro-American and it is better to plan on how to make that fact unimportant than to try to change it.
Of course, the most likely result in Egypt now isn't democracy, but another pro-American military regime with a quasi-constitutional face -- Pakistan on the Nile.