Prime minister Kan and former party secretary and overall heavyweight Ozawa are battling it out for the DPJ party leadership (and, incidentally, the seat of Prime minister) in a week or so. They have fairly different stances on various issues (the balance between rural and urban areas on one hand, and local self-determination - and thus the right to keep tax money at home - on the other for instance), but they matter a lot less than the two candidates themselves. This is really a referendum on Ozawa, more than anything else, made possible in part because Kan failed as a leader in the recent upper house election.
MTC thinks the battle is good for the DPJ, what with the constant media exposure and the DPJ message being drummed into everyone's heads. I'm not as sure. "left-shoe-first-or-right-I-just-can't-decide" Hatoyama came down in support of an Ozawa candidacy (after having kicked him out when Prime minister, and after being against earlier the same day), and others are supporting him due to old political debts. Other factions, local party chapters and supporters are similarly weighing what either candidate would mean for them and their position in the party.
It stinks, in other words, of the same backroom political dealing that the DPJ promised to abolish along with the LDP. It's being shoved into the face of the voters every day for weeks, and this time they won't even have the satisfaction of actually voting for either; they're passive spectators as a few hundred insiders decide who'll be their next Prime minister. Sure, the LDP did the same - three times in a row the past couple of years - but not being worse than the LDP is not exactly a lofty goal to aim for. And again, the whole reason to vote for the DPJ is to get away from exactly this kind of behavior.
Okumura of Globaltalk21 thinks Kan will be the winner. Let's hope so - maybe. Ozawa is very unpopular among voters, and he may cause a permanent rift within the DPJ if he wins. Also, changing Prime ministers after three months would be a new, hard to beat record even in Japan. On the other hand, the LDP hasn't really gained on this unfolding saga, so if the DPJ falls apart that could trigger the political realignment that Japan will eventually have to go through, one way or another.
And there'd be something epic about Ozawa the Destroyer tearing apart his own last, greatest creation at the very moment of reaching his lifelong goal.