She's bulldozed every top five player in the game right now, and given her usual Aussie form and the current standard of matches at the OZ Open, we'd most likely be seeing a Hingis/Williams final tonight. So I don't buy that she can't return to the top. As long as she plays like she was before the second ankle surgery she can beat anyone.
However, she hasn't worked hard since that surgery, and since October she's barely been on the tennis court. The women's game is more physical every day and Hingis is not a physical player at all. So until she gets out there and works on her speed and lifts weights I don't expect her back.
Now, is Martina the type of girl to work hard at fitness? No. Therefore I think her comeback chances are slim. Personally I'd like to see her come back in doubles for a few months, rack up a couple titles, and then play singles when she gets fitter and more confident.