He may be starting with the best odds of any Republican seeking the job since the last one who won it, then-King County Executive John Spellman in 1980 (with the advantage of his King base and a deeply unpopular Democratic incumbent, running within a Republican surge; but even the 1984 Republican surge couldn't save Spellman that year). He had three terms on the King County council, and retains some clear support there (how much in a governor's race against a Democrat remains unknown). He was elected AG in 2004 in a heated campaign, and strongly in 2008 in a very Democratic year. He has a reputation (which more than a few Democrats have and will contest) as a moderate, which would be helpful in the general. There are no obvious substantial opponents in the Republican primary.
In early-heat matchups, he polls closely with the presumed leading Democratic contender (not yet announced), Representative Jay Inslee. Notwithstanding the razor-close race of 2004, a lot of Republicans have long seen this as their best shot at regaining the governorship they last won more than 30 years ago. And that long run of Democratic control, the longest in the nation, is sure to be a big point of discussion over the next year and a half.
Against some of that are a series of land mines that should evoke to comparisons of Indiana Jones in the cave at the start of Raiders of the Lost Ark. He has already been treading carefully, stepping this way and that, so as not to tick off the conservative base while alienating the middle - an uncommonly difficult task this cycle. Democrats, well aware this has been in the works for a long time, have been firing shots in a variety of ways for quite a while; and comparisons to other Republican governors around the country have been in the air for some time now. (You can get a good overview of that at the Democratic site called Rob McKenna for Governor.)