Schwarzenegger praises his old nemesis Gray Davis

SACRAMENTO (Reuters) - Former California Governor Gray Davis, unceremoniously ousted midway through his term two years ago by Arnold Schwarzenegger, returned to the capitol on Wednesday at a time his reputation has seen a gradual revival.

Republican Schwarzenegger, who had little good to say about the Democrat during the unprecedented recall 2003 election, praised him at the unveiling of Davis' official portrait.

"Gov. Davis has served this state for more than 30 years," Schwarzenegger said. "He has done an incredible job."

"He always fought for the underdog."

The former bodybuilder also joked about an irregular heartbeat that landed him in the hospital early Wednesday for a few hours. "I got a little too excited that I was going to see Gray Davis' portrait today," he said.

Schwarzenegger selected one of Davis' top aides when he appointed a new chief of staff last week.

The former governor, who is now practicing law, saw voters turn against Schwarzenegger last month in the initiative process, an instrument of California's democratic system which Schwarzenegger had used to oust Davis.

"I've tried to envision myself as a senior statesman," Davis told Reuters in a recent interview, adding he was enjoying a more relaxed life out of politics.