The President has no interest in picking an attorney general that the Democrats will consider to be acceptable. It won't gain him any points, as the Democrats are intent on destroying him politically all the way up to November 2008. The Democrats have no intention of accomodating the President, and therefore he doesn't need to attempt to pacify them.
The Democrats will be taking a big risk if they try to hold up a nominee after so vigorously pushing for the resignation of Alberto Gonzales. Let them squawk, squeal, complain and threaten if he picks a good, solid conservative for the position. It's highly unlikely that they will do anything other than that.
George W. Bush should use this occasion to nominate someone like Ted Olson and pick a good fight with the Democrats. It will energize the Republican base, and put Democrats on notice that Mr. Bush is not about to accomodate them when they seem so intent on creating such a poisonous political atmosphere purely for their own gain.