Do not retire this character for any reason. We cannot continue to get rid of our childhood memories because of someone's terrible lapse in their moral compass. Peewee Herman had an issue with sexual scandals, yet his character was not retired. Let's move forward and make new memories.
I don't think anyone else can do Elmo other than Kevin Clash. Since Kevin Clash has resigned from Sesame Street, I think they should write the character off. I would have a Sesame Street character tell the viewer that "Elmo does not live here on Sesame Street, Anymore. He went to retire at his retirement home in Florida...."