a Disaster during STS-26 would definitively kill the Shuttle Program
scenarios for a disaster is long and realistic:
Flight computer get wrong data and shutdown ALL SSME.
a undetected fissure in Hydrogene line burst open.
Ice lose from ET and hit the Orbiter Wings.
bolds from dropped SSRB could hit ET and the Orbiter.
the pyrotech of Satellite release, blow and hit the Cargobay with shrapnel, cutting electric wires under it
so what next ?
IMHO this is not the end of US manned space flight.
President Bush senior or his successor Clinton will start a new program
the question is will US Senate and Congress give a billions dollar budget for it ?
At NASA they will proposed Shuttle II or "Single Stage to Orbit" super rockets,
but in end it will be a mini Shuttle like HL-20 or CRV on a Titan IV or Evolved Expendable Launch Vehicle in 1998
the biggest victim will be Space Station Freedom!
no Shuttle makes impossibly, to build original concept in orbit.
If they try to build a Space station, it would look more like
Man-Tended Free Flyer concept of ESA
it could be use as building block for a bigger space station.