Via the Twitter account of Brian Windhorst, the news has broken. Z will return to the Cavs.
However, he will not enter into contract negotiations until March 22nd, just before he is permitted by NBA rules to play for Cleveland again.
This is just speculation, but Ilgauskas had mentioned that he was wary of forcing the Cavs to cut a player to make room for his return, so perhaps his contract talks being postponed are his way of allowing either Danny Green or Darnell Jackson a little more time with their team before they have to leave and create a roster spot.
Z's agent has officially stated that the fans' support was key in his decision.
Welcome home, Z!