Too many moving parts
If so, it's either a concession by Bush or Reid got played. Or there's some complex maneuver at work.
The obvious read on this is that Bush, stung by falling popularity, weakening support for signature actions (Iraq, the War on Terrorism, Social Security, Katrina, ...), and the inevitable fight that would be mounted over O'Connor's seat, decided not to stretch. He chose a close friend, figuring the conservatives would back him on any nominee whose record wasn't easy to scrutinize. The ensuing outrage reflects an increasingly unhappy right wing, in this scenario.
If Reid tossed her name out, and this is some complex compromise deal; perhaps Roberts faces no serious probing over questions he ducked and documents that stayed hidden, the second seat is parceled out in some backroom deal. In that case, this is a rebellion against that deal.
This whole thing is odd. Roberts's triumphant ascendancy into the Supreme Court and the Chief Justiceship upstaged by the announcement of someone with a run-of-the-mill resumé? That's bad PR, not something this White House is known for. It steps on the toes of conservatives who want to crow about how Roberts hasn't yet banned condoms or packed every Democrat off to Guantanamo.
While we can't rule incompetence out absolutely, I feel like we're missing part of the story.