According to this report, the agreement puts Howell (who is a published scholar) back in the classroom, and affirms that he is subject to public university guidelines around the expression of religious views (and presumably, expressions of prejudice that would not be perceived as discriminatory if articulated in a community of like-minded believers.)
A bigger question might be: are religious institutions a legitimate "student service?" And what is the role of clerics on secular campuses, unless they have been hired in a secular capacity as tenure-track faculty or administrators? This isn't something I have seen discussed much, and yet most campuses devote a part of their budget to doing so. The Howell incident should perhaps cause us to wonder why, in this day and age, secular institutions feel they have any obligation to provide religious resources to students at all: or, to put an even finer point on it, to students of some faiths and not others. I suspect the answer to the question is that when they do hire preachers of various kinds, for one low, low, price they get an adjunct teacher/psychotherapist/co-curricular coordinator all wrapped up in one.
But it is also one of those wheels within wheels situations that makes me happy I am not an administrator. Nothing I have seen has addressed the question of a complaint filed by a student not in the class: despite your views on faculty hired because they have been approved and paid for by the Vatican, all of us should find this a little scary. It has not exactly resolved the academic freedom issue, which may create difficulties for UI down the line. While Howell will have a contract for next semester, the religion department now has control over its hiring (as it should), and will decide whether to retain him in the future.
So here's the happy choice facing UI's chair of religion next year: continue to employ indefinitely an instructor who the department doesn't seem to care enough for to defend, and who it never hired in the first place; or decline to employ him further and risk a lawsuit backed by either the liberal AAUP, the conservative Alliance Defense Fund, or both.
Because it is summer, I have illustrated this post with James Tissot's "Jesus Teaching At The Shore," taken from this website.