First, I think the betting has to be for a recess appointment. Bush seems unlikely to nominate anyone the Democrats will much like, and it shouldn't be hard to get the 40 Senators necessary to prevent an up or down vote. Sure, there's that agreement with Harry Reid that Bush won't pull a John Bolton, but the evidence is pretty strong that the President doesn't consider any promise to Democrats to be binding if it becomes inconvenient.
With that in mind, the range of possible choices both narrows and widens. In particular, any notion that Bush will appoint somebody with a sterling reputation for independence likely is off the table, unless he can find somebody with that kind of reputation who really isn't. At the same time, if a recess appointment is the real plan, it doesn't really much matter if the nominee can be confirmed.
Still, some of the choices that have been suggested would seem unlikely because the wrong questions would get asked at the confirmation hearings. Fred Fielding, for instance, actually might be qualified, but his repeated assertions of executive privilege would make any hearing uncomfortable. Michael Chertoff would get asked different, but no less uncomfortable questions about the performance of DHS under his leadership, starting with Katrina and maybe extending to the ongoing passport fiasco. (Yes, the State Department issues passports, but the rule that's forced so many people to apply for them came from DHS.) Similar considerations eliminate a lot of possibilities.
I think you also can discount sitting Senators, who otherwise might be attractive. For instance, Arlen Spector would be an interesting choice, since he talks like he's independent, but doesn't act that way, but Pennsylvania's governor is a Democrat, so you would swing one more vote in the Senate against the President.
All things considered, I wonder if the President might end up picking Paul Clement. He's the Solicitor General, so he's gotten past one confirmation already. He doesn't appear to have been involved in the U.S. Attorney firings, which is a plus. He's also part of the team already, which is pretty important to this Administration. He might not be confirmable because of things like the Administration's positions in various Supreme Court cases, but he's plausible enough that the President could make an argument that a recess appointment is both necessary and reasonable if the Senate didn't confirm him by, oh, November, when the next real recess is coming. I think he might be the smartest choice the President could make.