According to The Hill, conservatives have already been assured that Alberto Gonzales has been taken off the table. Any hope Democrats had of dodging a bullet by having this "flag-burning, baby-killing liberal" appointed to the SCOTUS - well, go back to smoking your wacky weed.
So, if Gonzales is seen as being "too liberal" then where does the choice fall? There's a lot of buzz about Edith Brown Clement, appointed to the 5th Circuit Court in 2001. She doesn't have an "extreme" track record (at least not one's that's been uncovered as of yet), she's a woman, and in a time when the White House is under considerable heat, they could use some good press that might be generated by an easy confirmation process.
Besides, if they just wait long enough, they'll have another chance to send up a tougher appointee once Rehnquist retires, either voluntarily or otherwise.
Failing Clement, look for Emilio Garza to be a possibility. Garza would fulfill the President's wish to appoint the first Hispanic to the SCOTUS, and is seen as much more conservative than Gonzales. He'd be a tougher confirmation, however, and as such, PTF feels this might be a choice on the list for later.