I agree with all your comments but this one,
bentleg:
Similarly they won't drop the policy because they would lose green support and lose government.
It's probably too late now, for Gillard has invested too much of her political credibility in the tax now, but for the life of me, I can't see why she doesn't stick to her previous form and nenege on the agreement with the Greens (as she has with every other damned political promise she's ever made).
The Greens have nowhere to go. There's no way they'll ever walk out on Labor, whatever Labor does, for Abbott will never never co-operate with the Greens now. Last August, yes... buy now? No way - and the Greens know it. He's well aware of the current public mood and if he's put in a position to do so, he'll go to an election, possibly even a double dissolution if he can, to gut both Labor, but more importantly, the Greens, who are increasingly being seen by the conservatives as a far bigger threat than Labor.
So in my humble opinion, Jools could do the chicken dance on Brown's head (an appealing vision in more than one way) while burning every ton of brown coal in Gippsland and Brown would stand there with that annoying bland smile planted firmly on his dial, for he can only enjoy the trappings of power with Labor on the government benches. I can't understand why Gillard didn't - doesn't - see that from the start.