McDonald is very underrated. He isn't the best bowler you will ever see, but he just bowls tight, gets through his overs quickly, bowls stump to stump all day and picks up the odd wicket whilst being economical.
For this Ashes series, IMO McDonald should be picked before Lee, but Clark should be selected before both.
I've said it 1000 times, but this should be our bowling attack.
Johnson
Siddle
Clark
McDonald/Hauritz (depending on the conditions)
Is he actually going to be taken out of the squad? Is he going to be replaced, and not play in the Ashes?
At 6, if Watson isn't bowling, we should have North. He hasn't done anything wrong, and has played well. If Watson can bowl, and is deemed fit to last the game or tour (which I doubt more and more every day) we should have him. He is about on par with North as a batsmen, and it's only their bowling at splits them. North is a batsmen who can have a trundle, and Watson is a batting allrounder. If he is judged unfit to play or bowl, a replacement should be brought in.
In terms of replacements, IMO Hodge should be the front runner. If the selectors didn't have his cards marked for whatever reason, I'd say he would have played a few more tests since his last test match. I am not keen of Ferguson, there is probably someone else I am forgetting though.
EDIT: The guy who I am forgetting is David Hussey. He should be brought into the squad is Watson is omitted.