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Howard likely to be challenged
According to crikey.com.au (subscriber version only), there is a leadership challenge in the works in the Liberal Party. In fact there are two: apparently Costello and Abbott are both jostling for position. Loyalty to Howard has been predominantly a survival thing for the Liberals, but it is unnecessary now given that they will control the Senate come July - they will be immune to political loss until the next election, so they no longer need Howard (and there is no guarantee that Howard has any more rabbits in his hat). Backbenchers in particular are said to be unhappy with Howard's authoritarian style, and they have been speaking more freely against his hard-right policies in recent times, so they may be ready to make the switch.
It makes sense for Costello to make his move within the next few months too. Howard has repeatedly said he will only go if the party doesn't want him or the nation doesn't want him - in other words in a leadership challenge or an election loss. That means Costello's only chance to be PM is to make the challenge. His downside is limited - if Howard retaliates against a failed challenge by demoting his golden goose, it would set the stage for another challenge with a better chance of success.
This is somewhat different to and more credible than earlier speculation.
As far as I am concerned, this is long overdue.