Ballmer's best move at this point is to follow whatever plan was in place, and look for the best minds he can find to take over Xbox. Putting Spencer or any of the other guys would be a mistake. I believe J Allard is still consulting with MS, I'd bring him or better yet Ed Fries back, someone that knew the pulse of the Xbox at the beginning and knows what its fanbase wanted.
Unfortunately, I don't think Mattrick is entirely to blame for the direction Xbone took, I believe Ballmer had a big hand in it, and that is hinted at strongly at the fact that he met with Hollywood people awhile back. It's very possible that the main idea of what the Xbone was supposed to be came from Ballmer or ballmer and Mattrick. I don't think the Xbox division is going to magically saved unless Ballmer takes his hands out and lets a better person manage it completely.