(FORTUNE Magazine) – Is Martha Stewart ready for jail?

You wouldn't think so, given that she has been fighting her accusers ever since she got into trouble over her ImClone stock sale two years ago. Stewart now knows the sentence she faces--five months in prison and five months' house arrest--and Judge Miriam Cedarbaum has granted her request to stay out of jail until she completes her appeal. But Stewart is hardly marking her calendar for the social whirl this summer. Rather, she is wrestling over "my conundrum," as she calls her extraordinarily tough decision on whether to do time soon. Surprisingly, she may choose to do just that. Says Walter Dellinger, the lead appellate lawyer she recruited two months ago: "She's giving very serious consideration to going ahead and serving her incarceration sentence for the good of the company, so she can put the issue behind her."

Not that she is suddenly caving in to her accusers. Despite rumors to the contrary, Stewart will vigorously pursue an appeal of her conviction for obstruction of justice and lying to investigators. "There's absolutely no consideration being given to forgoing an appeal," says Dellinger. But the reality is, even as she adds another hotshot attorney to her high-priced defense stable (Dellinger, a former assistant acting Solicitor General in the Clinton administration, has a 12--5 win-loss record in the U.S. Supreme Court), Stewart's chances of winning on appeal are slim. Only 3% of federal criminal appeals succeed. And in the U.S. Second Circuit, where her appeal resides, the success rate is 0.9%. Dellinger contends that he has at least five strong arguments that raise Martha's chances substantially. Those include: One juror, Chappelle Hartridge, allegedly lied in the jury selection process, and a witness for the prosecution, Secret Service agent Larry Stewart, allegedly gave false testimony about the ink analysis of a key document in the case. (Stewart, no relation to Martha, has been indicted for perjury.) But even if Dellinger wins and the Second Circuit reverses Martha's conviction, her ordeal may continue. The government could try her again, making it late next year before it's all over.

Meanwhile, Wall Street loathes uncertainty--as does Stewart, who has watched the stock price of her company, Martha Stewart Living Omnimedia, drop almost 50% since her legal mess began. As the 37% spurt in the stock price on sentencing day suggested, if she can fulfill the promise she made at the courthouse steps--"I'll be back!"--by year-end, the better it will be for Martha the businesswoman and Martha the brand. "The brand is strong, confident, and pretty--all things that have been compromised and won't improve until she gets this behind her," says one media executive. And for advertisers, having Martha serving her sentence while her lawyers work on her appeal would be a good thing. Some even foresee perverse reward in Stewart's doing prison time. Says one advertiser: "The sympathy meter would go way up." --Patricia Sellers