Update:
today's S.F. Chronicle reports, alas:

With just hours to go before the festivities, Clay Logan, host of the Possum Drop, said he'd received a call from a national animal rights organization threatening to sue him for animal cruelty if he used a live possum.

"So I found me a dead one," Logan said.

As fireworks popped and lovers kissed, the dead possum swung from a Citgo sign. And as the festivities ended, many revelers trudged away, saying their small town fun had been spoiled by big-city ways.

"Hell of a way to start the New Year, saluting a dead possum," said Steve Barringer, a blacksmith.

Full story at http://sfgate.com/cgi-bin/article.cgi?f=/chronicle/a/2004/01/02/MNGT8429GI1.DTL.