Big development in Fall River. Mayor Jasiel F. Correia II (D), who is under indictment for stealing from investors and tax fraud, lost the recall run overwhelmingly, 7829-4911. However, Massachusetts allows a candidate facing a recall to run in the replacement race (not that uncommon a provision). In this case, Correia was one of five candidates. He came in first with about 35% of the vote, beating out City Councilor Joseph Camara, School Committee member Paul Coogan, School administrator Kyle Riley and Erica Scott-Pacheco. An editorial in the Boston Globe noted this possible result.
While this is an unusual development, it is not unprecedented -- though I will have to search for the same result.
The reason that it is unusual is that having a replacement race where the candidate can run in the replacement race is itself not the standard recall law. Many jurisdictions do not have the "up or down" vote on a recall -- instead they just have a new election for the position, featuring a guaranteed slot for the candidate (Michigan, Wisconsin have this). Some places do not have a replacement race and instead just allow for an appointment to the position (notably Oregon); Rhode Island gave the position to the second place finisher in the last election. California has an up or down vote on the recall, but the candidate is barred from seeking the office in the replacement race.
That said, it is not that uncommon and in fact Fall River almost saw this result a little over four years ago. The city had a recall against then mayor Will Flanagan. Flanagan lost the recall, but came in second in the replacement vote.
Louisiana proposed changing its law to ban recall loser from running in a replacement race after one such candidate got 1/3rd of the vote after being kicked out (though that candidate did not win). Here's some other examples of candidates running in the replacement race and losing.
Update: In 1982, Mansfield, Massachusetts Selectman John McNair pulled off this exact type of victory (losing the recall, winning the retention race). This was part of a four person recall (over the firing of a town manager). The other three Selectmen, David May, Frank Ciolella and Norman Manhana, lost their seats. The race is noted in Joseph Zimmerman's The Recall: Tribunal of the People.