According to this excellent NY Times graphic, New Orleans would receive about 3 to 5 inches of rain from this storm. That seems sufficient to break the fragile levee repairs and re-flood the city....
It's already happening.  CNN is reporting that water is washing in over the levees in the 9th ward.
Yes, the levee has been overtopped but has not broken. Now, NPR just interviewed an Army Corp of Engineers guy who says that the city can handle 6 to 8 inches of rain, which is just a bit more than the current forecast. Do we believe this?
Water is "waist deep and rising fast."  

"Our worst fears came true," a National Guard official said. "The levee will breach if we keep on the path we are on right now."

http://www.msnbc.msn.com/id/9438536/

Live Data from a buoy in the lake pontchartrain is available here (takes about 30 sec. to load). The water level is 1 feet above normal.