Conservative judicial blog Confirm Them reports that many people close to the White House believed the Novak story last week that CJ Rehnquist was going to retire. Speculation has it that Rehnquist plans to retire, but events (O'Connor, the London bombing, Hurricane Dennis, what-have-you) keep conspiring to frustrate it. I'm sure the next thing will be Tom Cruise's wedding. I still think it quite believable that Rehnquist would like to continue as long as he feels able to do so, especially if Bush can install a conservative replacement for O'Connor on the Court for the 2005 term.
Still, if Rehnquist is intentionally delaying his retirement, it could be due to the widespread suspicion that Bush will nominate AG Gonzalez to replace him. Many conservatives think that even more likely if Bush can "package" Gonzalez with a staunch conservative replacement for O'Connor like Edith Jones or Janice Rogers Brown. If Rehnquist can avoid that by serving another term, it's entirely possible he might do that. At least, he could be putting off a retirement announcement until the White House clearly signals that Gonzalez is not being considered for the post. Before you discount the possibility that a Supreme Court justice would seek to influence the naming of another justice, consider the substantial evidence that justices time their departures to ensure that a President of their liking names their successor and the considerable efforts justices in the past have made to get friends and favored colleagues appointed to the High Court (see esp. Walter Murphy, The Elements of Judicial Strategy, pp. 73-78.)