While this does streamline the process, personally I think it's a mistake. It is true in the past that judges who had not been on the Supreme Court had been nominated directly to the office of Chief Justice. But there's something about having the experience of how the Court runs that I believe is invaluable. Frankly, I'd rather see any one of the current seven Justices nominated for the job.
But I guess Bush is looking to make things go more quickly. There's also talk that perhaps O'Connor will keep serving until Bush chooses a new person to nominate for her seat. Maybe he'll surprise us.