This can be a difficult question to answer because there are so many factors to weigh against wisdom and how they relate to our Christian convictions of grace and truth. In fact, Paul and Barnabas parted ways because they couldn't reach an agreement about reinstating Mark as a missionary partner after he abandoned them in their previous journey! (See Acts 15:36-40).
As we think through this, it helps to remember that God only uses flawed people (because all people are flawed). We also must recognize that even after King David's sex scandal with Bathsheba and her husband (a sin that he never even owned for himself until he was exposed by Nathan!), David continued to reign as God's King over His chosen people of Israel (See 1 Sam. 11-12, Ps. 51). Granted, David was severely punished, and deeply repentant (something we don't always see in our leaders). But this goes to show that God's grace often extends farther than we may expect.
On the other hand, we know that Jesus raised the bar very high for discipleship, and Paul gave certain qualifications for leaders (See 1 Timothy and Titus). Many leadership failures also involve victims, and they too must be considered, both for their healing process and for their safety. Though the body of Christ must always extend the grace of God, that may not mean reinstating the fallen leader back to a similar position.
Fallen leaders must be held accountable. Repentant leaders need forgiveness and the opportunity that all of us need – to be restored to the wholeness for which we were created. After restoration, spiritual discernment is needed to determine whether a leader may be restored to a position of leadership. The process of restoration can take time and requires wisdom on the part of everyone involved. In many situations there are no easy answers or norms, apart from the grace and truth that God offers through Christ Jesus.