This is the latest step towards the resolution of an issue that will ultimately be settled by the Supreme Court (unless they duck it): whether or not political advisors appointed by the president are legally permitted to invoke executive privilege.
Harriet Miers and Josh Bolten have already been cited for contempt of Congress for doing so. Attorney General Mukasey did not refer those matters to a federal grand jury. Subsequently, the House sued to get Mukasey to act and, I believe, the case is still pending.
Karl Rove is almost certainly headed in the same direction, though there is another alternative: jailing Rove in the capitol and putting him on trial there. It is legal, plausible, and, I suggest, defensible to the American people. Here’s more on the procedure of “inherent contempt.”