If a child's arrest was a single, isolated incident the pastor needs the prayerful support of his leaders and the church. He's got a full plate as a parent and doesn't need the worry of losing his job to exacerbate the situation. That doesn't seem to be the situation here as two problems are highlighted in your example.
First is the kids. Preacher kids are no different than everybody else's kids. If there is a pattern of illegal behavior ( drugs, stealing cars) there is evidently not much parenting going on in that home. Most kids do not engage in illegal behavior. The ones that do have been given long leashes, limited boundaries and little supervision. I know everybody has an anecdote about the kids of a friend of a friend.... There are exceptions in every scenario.
Second is the pastor. You said, "...especially if said pastor apparently overlooks such behavior?". That would be where I see I Timothy 3:4-5 applying. If he chooses to overlook the behavior of his children and allows it to continue he has abdicated his parenting role. He not only has little control over his household he apparently is doing little to rectify the situation.
Two patterns emerge: the conduct and behavior of the children and the conduct and behavior of the pastor. He needs to take a break from the pulpit and get his house in order.
I agree.
What is presented in the OP is far more than just being caught up in sin and being caught.
What is evident in the OP is the history of rebellion.
The question is what is a pastor to do? Resign?
Depends.
For instance, I was once in a situation in which a church had a christian school. The pastor let it be known that he did not want to know the conduct of his children was a problem, and designated an associate pastor to handle the complaints.
That pastor then has "crossed the line" and should have been accountable to the assembly as not having his own house in order.
There isn't a parent who has not experienced the pain of a problem child - be it Adam and Eve, to the present day. All children are at some time in their life a problem child.
IMO, there are two times a parent can mold a child.
Ages zero to three - that is when the child learns that no means no.
Ages 10 to thirteen - that is when the child learns that no still means no.
Back to the OP.
The rule of thumb would be the response by the pastor. Is there a documented history of the pastor covering sin ("boys will be boys" type) or is there a history of the pastor responding appropriately.
In the first - nope, the pastor long before relegated authority to hit and miss and that is not leadership in the home. Resign and put the house in order.
In the second - yep, the pastor has a troubled child, a child of rebellion, and though unfortunate the pastor has made documented historical efforts to reign in and "rule" the home.
Too often folks look at the level (type) of sin or if the children are even sinful and equate the ability of one qualified to the ministry.
That isn't completely the whole story. It is the rule of the home - the financial, care, upgrade, outreach (being sociable and engaging), and a number of other factors. The discipline of the children is a part of the mix.
When discipline has been in place, and has been consistent and has been appropriate and the child still rebels, that really isn't a reflection upon the home.
What is not acceptable is inconsistency and avoidance of the "rule" of the home: financially, care, upgrade, outreach, children ... Inconsistency - nope resign and get things in order.
Padre - you did good.