In it, but not of it. TPM DC
As Dave Weigel points out, this setup would result in Democrats losing a few Senate seats under the current balance of power in the state legislatures. On the other hand, as Media Matters notes, Sen. Scott Brown (R-MA) could have never been elected under this system -- the Democratic legislature in Massachusetts would have selected a Democrat to fill the seat, and that would have been that.
It should also be noted that the pre-17th Amendment system was prone to quirks of the district-based systems for state legislatures, on those rare occasions when a state legislative election effectively became a referendum on the Senate seat. For example, Abraham Lincoln's Republicans won the popular vote in the 1858 Illinois legislative/Senate race, but Stephen Douglas's Democrats benefited from an outdated and badly apportioned district map that preserved their majority. Lincoln carried Illinois against Douglas in the presidential election two years later, in a statewide vote that was not dependent on districts.