Jimmy Fallon seems to be a pretty popular comedian, and rather well liked. Considering that I think he would make a good replacement for Jay Leno. It is hard to say how well, since I do not really watch Jay Leno, but I am sure they will find a way to make it work.
Yes, I think that Jimmy Fallon with be a good replacement for Jay Leno. Jimmy Fallon is very funny. He hasn't been in the business as long as Jay, so it will take time before he will be in Jay's league, but I think that it will happen eventually. We could have had the same conversation about Johnny Carson and Jay Leno 20+ years ago, though no one will ever be in Johnny's league.
Although Jimmy Fallon is a good comedian, I do not believe him to be as funny as Jay Leno. I may be biased in my answer due to the fact that I do not particularly like many of the changes in this generation but I grew up watching Leno late at night and the thought of Fallon taking over does not appeal to me.
There is going to be a great deal of pressure on the next host of the Tonight Show. Fallon isn't ready for that level of pressure, especially with NBC not giving a host a chance. Look at what happened with Conan. If Fallon isn't a success right away, he will probably be cut.