Clearly, the chances of a compromise on the issue of income taxes before the end of the year has increased, and it seems more likely that income tax rates will not be increased in 2011 (at least for those with incomes under $250k). For larger incomes, it remains impossible to predict, still.
Unfortunately, the Republican/Tea Party resurgence as it may apply to estate tax legislation is harder to fathom. More right leaning legislators may not favor compromise, and begin to look for full repeal of the estate tax again. On the other hand, Democrats may be more willing to compromise (even this year) on a $5 million exemption than they were previously.
Accordingly, the landscape has changed, and the politics and the calculations, but deadlock may be more of a risk then it was last month. Remember, there is no explicit or implied link at this point between income tax legislation and transfer taxes.