I agree with you in totality.
The crisis is indeed within the PAP.
I have never come across an event where the rug had been pulled from under PAP in this manner. WP giving up its crown jewels to the open market is bold, unprecedented, and unexpected. The ball in now in PAP's court. There is nothing for WP to do but wait. I have no doubt that Hougang will remain in WP's hand as the margin is so wide. I am sure the healthy margin was afactor that was considered.
PAP has never called by elections when its MPs died. The trauma from the by-elections of 1981 called to replace Devan Nair who accepted the Presidency led to JBJ creating history. By-elections is a dirty word for the PAP. The By elections strategy of 1991 though it was not a by election sealed the fate for PAP for good for this matter.
PAP is right that the people will happily vote an opposition figure if the govt of the day is not impacted.
Once again, there is nothing for WP to do except keeping working the ground and keep faith with the people.