Well the answer to this question depends on your perspective.
The only way John Howard will leave (in the forseeable future at least) is on his own terms. Costello does not have anywhere near the numbers to launch a formiddable challenge. Howard is a political master. His party recognises this, and even those who for factional reasons would prefer costello, would probably prefer howards leadership to run its natural course so as not to disrupt their government.
If the question is asked as to when Howard should go, I think this depends on a few factors. I have the belief that Howard will stand at the next election. He is still passionate for the job, and would not want to leave unless he had to (say there was mounting pressure for a costello challenge). There is nothing stopping him from contesting the next election, and I believe he will. Probably then the most relevant question is how far into that term and beyond would he go. I dont think he is playing games with us. He is not trying to become the longest serving prime minister or any of that, so he wont be here for another 10 years.
I feel he will go when he becomes tired of his job, or feels that he is happy with his political legacy. Perhaps he will want to fight the next election in order to see the IR reforms firmly in place (to prevent labor from shredding it up). Maybe once the election is won, he will begin to plan his succession.
The other option of course is that the liberals lose the next election. The fact is that this is a less than even chance. There is still a chance, and this of course would see Howard quit politics.
As for costello, I dont think he would be any better from a labor party's perspective. He is the preferred prime minister to kim beasley, and he has 10 years of sound economic management behind him. If the economy is a key issue like it always is, he will be the most popular choice. He has also been detached from most of the recent events such as AWB and IR reforms (even though he was one of the founding members of the HR nicholls society which is synonomous with promoting labour market reforms that go a lot further than workchoices). So costello may give the liberal party a clean slate.
On the other hand Howard is immensely popular, and the liberal party will want to capitalise on that as much as possible.
Howard to stay, Costello to wait a few more years....