"Can someone come up with a rational explanation why GW would cave like this?"
Sure, I will tell you. After Bush wins in November he is going to pay back all the RATS that stabbed him in the back over the last four years.
By agreeing to this, he gets his judges approved. So now that is another issue off the table. Depending on the election results for both the presidency, senate and house, the WH can safely ascertain what they will need to do about the court system over the next four years.
If Daschle loses this all becomes irrelevant. Bush as always is playing poker. If Bush loses, it also becomes irrelevant because the Senate still has a Republicn majority, Bush's judges are in office and the RATS won't be able to fill any high court seats either.
At worst this is a stalemate.
It is already irrelevant. The 108th COngress will end in December.