If he's going to "retire", which I think is a rumor too many of us are coming up with based on Democrat talking points and propaganda....but anyway, under that scenario he should do so before the 2008 elections so that his replacement and McConnell are running concurrently. That would strengthen the ticket.
"under that scenario he should do so before the 2008 elections so that his replacement and McConnell are running concurrently"
That's a good point. Bunning can retire right after November of 2007, and Governor Fletcher can name Northup to replace Bunning even if Fletcher loses reelection. But that would set up a special election in Northup's CD to be held early in 2008, which would be bad because (i) the Democrats could run a strong candidate and be favored to take over the House seat, and (ii) since having a special House election in early 2008 may mean that the special Senate election would also have to be held on such date, so McConnell wouldn't be on the ballot. So, assuming that Fletcher gets reelected in 2007, perhaps the best strategy would be for Bunning to retire in February of 2008, after the late-January filing deadline for House and Senate candidates but before the May primary, and Fletcher names Northup to replace Bunning. The Democrats would be stuck with whichever loser would choose to run against Northup for the House in 2008 (after having defeated first-tier candidates over and over again, I don't think she'll get tough competition in 2006 or 2008), while the GOP could hand-pick somoeone good to replace Northup in the ballot. On the Senate side, several RATs would have already announced they were running against McConnell, and they would look foolish switching to run against Northup in the special Senate election to be held in November. Northup might get a good Democrat candidate running against her, but she'd have the advantage.
Now that I think about it, an even better plan is if in May of 2008(after the primary), McConnell announces that he is retiring and Northup is named as his replacement both as a Senator and on the ballot. Northup will face whichever sacrificial lamb would be running against McConnell; the sacrificial lamb could be convinced to step down and let someone else run, but that's easier said than done. Bunning can then retire in July of 2008, and Governor Fletcher can publicly call on former Senator McConnell (out of office for less than two months) to please fill Bunning's office so that Kentucky isn't suddenly without any Senators with seniority. McConnell would "reluctantly" accept, and the new Democrat Senate candidate (selected by the party leaders, I guess, or otherwise at a hastily called primary) would have to run against McConnell. Northup would be elected to a 6-year term, since she would be running for McConnell's full term, and thus would not face reelection until 2014; while McConnell would be elected for the last 2 years of Bunning's term, and can run for a full term in 2010. The question is, would the people of Kentucky allow this to happen or would there be a backlash against the tricky Republicans?
I think that Mitch McConnell will retire in 2008. He's had some serious health problems recently, one of which required major surgery. Furthermore, he was reelected by an the largest margin ever won by a Pubbie in KY, and that would be a high note to retire on.