328K, it is a bit puzzling that people lean so heavily on one wrongly inserted word ("recall") in Section 8.30, while completely ignoring an entire chapter of the Charter ("CHAPTER II. RECALL") which is where the provisions governing recall procedure reside. See § 3.18.
Now, if 3.18 happened to spell out a three-step process, wherein voters (not the Council) would first be asked a Yes or No question on the recall, then 8.30 would be invoked if the voters decided Yes, the incumbent should be recalled. At that time, of course, yes, the City Council chair would become interim Mayor, and the Council would vote as you specify.
However, 3.18 outlines a two-step process, in which the first and only election held after a recall petition is certified involves candidates; and if a candidate other than the incumbent wins, then there is no vacancy that would invoke 8.30. Well, maybe there'd be a very brief one, lasting only between the certification of election results and the swearing-in of the new mayor. But the point is, under the Charter, the people vote first, and then the City Council acts as necessitated.
Gardener, while I agree with you that local rule should prevail, the section of state law cited does pertain to municipal recalls. There is a valid case either way, and it's likely a judge will have to decide.
Another point is that the state law governing city recall signature thresholds was passed in 1997. If the section of the Chattanooga City Charter was added after that (i.e., during the 2002 revision), then it may hold up. But if it was there before the 1997 state law, then there is a strong case that state law supersedes city charter language here.