Rather like the title for Geoffrey Howe, Hestletine and Prescott, it's more a 'important figure in the government with an oversight of domestic issues' post. If Cameron falls under a passing bus tomorrow, Hague would be in pole position to take over as PM, since he is (to all intents and purposes) deputy leader of the largest party in the coalition/whatever arrangement the Lib Dems come to.
While I can see the merits of Ashdown's name being mentioned in the context of defence -
a) the Lib Dems need to confirm they're on board
b) his experience suggests that he'd be better off in some foreign affairs post
c) the Tory party is likely to want Fox or another senior Tory in that post, and DC would face some bother in parachuting Ashdown in as Sec of State (even if Ashdown is properly qualified to parachute onto main building).
(Edit - don't f'ing have finger trouble & press 'submit' before you've finished typing, Archi...)
Granted, he'd possibly be good with his military experience, but not sure that this'd go down well with the Tories, and, more to the point has it actually been confirmed? Whet memorial question - is there a link for that?