Bill Kristol of The Weekly Standard passes along what he calls "well-informed speculation" that Justice O'Connor will announce her resignation at the end of the Supreme Court term next week and that Chief Justice Rehnquist will remain on the Court for at least another year (health permitting). In her place, in order to avoid Democratic filibustering, the President would nominate current Attorney General and former White House Counsel Alberto Gonzales -- Bush wants to appoint the first Latino Supreme Court justice and Gonzales is considered a moderate.
Assuming Kristol is on or near the mark here are the problems: (1) as Edward Whelan has noted here and in an earlier post (click the internal link), Gonzales has been at the forefront of the Bush Administration's legal strategy on the war on terror. That legal strategy will be challenged for as long as Ramsey Clark gets money from useful idiots like George Soros (and that will continue long into the foreseeable future), thereby requiring Gonzales to repeatedly recuse himself. Whelan has counseled against a Gonzales appointment for that reason. (2) Gonzales is entirely too moderate for the right wing of the Republican ranks and that will cause a large hue and cry if Bush abandons their concerns. And the evangelical Right has some strong pull. (3) Bush would be seen as kowtowing to the Democrats' filibuster strategy, a legacy he does not want. That would also play against type because Bush has shown time and again he is willing to push through his legislative demands even in the face of the Dems' filibuster threats. (4) Gonzales' moderate reputation is completely offset in much of the Left's outlook precisely because he has been so involved in the US terrorism fight. For that reason, Gonzales will not get an easy confirmation ride.
Bush is known for throwing a curveball every now and again, and the Republicans in the Senate are likely to shatter a filibuster if the Democrats try one against a Supreme Court appointment. For that reason, I'd give better odds to an appointment of Miguel Estrada or Emilio Garza as the first Latino justice for the US Supreme Court.