Kepler's Books will be reopening this weekend! They renegotiated the lease.
The new business plan (according to the Palo Alto Weekly) involves a membership program (it's unclear to me what's involved in that) and various local consultants helping out with marketing and financial stuff and so on. That article also notes that the store can only remain open if people shop there; if the trend toward buying books online and in chain stores continues, the store could close again at some point.
A San Francisco Chronicle article has a little more info.
Sadly, I will probably continue not to buy books there very often, simply because there are other bookstores that are a lot closer and whose neighborhoods I visit more often. But I wish them well.