If recent reports are accurate, the Egyptian military has decided to tilt more decisively against Mubarak. Up until now, it has sought to play the regime's "good cop" to the "bad cop" of the Interior Ministry's police and other security forces -- resisting the calls of the protestors to force Mubarak to step down, but doing so in a way that preserved the military's generally positive standing with the protestors.
This latest move -- meeting without Mubarak and issuing a statement telling the protestors "All your demands will be met today" -- appears to be what is known in the civil-military relations business as a coup. The precise power arrangements of the coup are unknown at this time, perhaps even to the coup leaders. It is certainly possible that Vice President and Intelligence Chief Suleiman will remain as the titular head of the regime. Indeed, he may even be the coup leader himself.
And, of course, the reports themselves could be inaccurate and this could be an elaborate Mubarak-led feint designed to wrong-foot the protestors and perhaps even expose and compromise his detractors within his own ranks.
But if the reports are accurate, it appears to be a coup, or at least the start of one. It could fail in any number of ways. Mubarak could launch a counter-coup, but only if the security forces split and a significant number -- especially the crucial ground forces needed to maintain control of the streets -- stayed loyal to him. It is unlikely that the uniformed military would split; presumably the coup leaders have done their own nose count and have addressed this concern. Fighting between pro-Mubarak security forces and anti-Mubarak military forces is a bit more plausible, but on the whole this doesn't seem the most likely way it would fail.
None of these seem very likely at present. The most likely scenario is that this is the way the regime has chosen to orchestrate a "transition," one where the current ruling elites remain the same but President Mubarak departs, thus satisfying the most visible -- and also the easiest-to-satisfy -- demand of the protestors, but leaving in tact the underlying political order that gave rise to the protests in the first place.
If I am right, then the most likely failure mode is that the coup leaders miscalculate and in seeking to preserve "order," they so further inflames the protest movement that the military's own standing in the country is compromised and its relations with the military's chief funder, the United States, is irreparably broken.
It could also succeed, where success is defined as the military paves the way for a genuine democratic transition. That is not unprecedented in history (cf. Chile, Argentina, and elsewhere), but it is a painful path usually dotted with many setbacks and usually takes much longer than one would like. Egypt's own history does not give much optimism for the rosy scenario; the people of Cairo are still waiting for the democratic transition to come from the 1952 coup.