As to what the popular historiography and reportage says about Holt's weaknesses, consider this:
Bishop Tom Frame in his
'The Life and Death of Harold Holt' is all over the place when it comes to predicting what might have happened if Holt had lived.
"
[At] Christmas 1966... Holt could realistically expect to remain in power until the 1972 election," p.173. "
The government's fortunes [during Holt's last year alive] had to change soon or it's next term of office---assuming it was victorious in 1969---would be its last. And given the Liberal Party's tendency to dispose of its leaders after a poor performance, Holt had reason to be anxious... He had been leader for such a short time, and most expected him to lead for at least another four years," p.244/245. Or, until 1971, in other words, not long enough to face Whitlam for a second House of Reps election battle. (Elsewhere Frame implies that Holt would probably have wanted to retire during the election year of 1972 itself, yet this was contingent on his party not forcing him out first, p.302/303.) Nowhere does Holt's biographer say that Holt could have turned back the Labor tied if he'd fought the 1972 election. And this is an historian who doesn't give much credence to the idea that Holt faced any serious leadership challenges while alive. AFAICT no other writer is as kind to Holt or to his standing within his party; and yet he believes that Holt was 'complacent' and overconfident about the Coalition's electoral chances after his first victory, p.170
Gerard Henderson (
'Menzies Child, The Liberal Party of Australia') devotes almost all of the Holt portion of his chapter on the immediate post-Ming leaders, 'Very much the Second XI', to the theme that HH was on the way out, p.190/198. Alan Reid's entire book on Gorton,
'The Gorton Experiment,' is predicated on the idea that that man's own troubles were an outgrowth of the same plotting that Holt had faced, adding that Jolly John brought his own laconic dysfunctionality to this ongoing party turmoil.
And Bridget Griffin-Foley fills in the details of Billy McMahon's efforts to become leader after his initial failure in early 1968. This second coup attempt was before the 1969 election had proven once and for all that the Coalition was at risk of losing office. It's a plot that Reid never did go in to great detail about, seeing as it was Reid's boss Sir Frank Packer who was the leading spruiker in the business/media establishment for Little Billy (
'Party Games: Australian Politicians And The Media From War To Dismissal', p.157.) Before anyone says this couldn't happen if Holt had lived, consider that Menzies' official biographer,
Alan Martin, tells us the great man was so afraid of McMahon's deviousness that he was pleading with Paul Hasluck not to leave parliament, to stay as Holt's successor,
as early as November 1966, the very month of the Khaki Election victory, p.556.
But just how electorally strong was Harold Holt during his term as PM? Could he have avoided the near-cliffhanger result that almost saw Gorton thrown out by the electorate?
Sure, Holt won the great landslide election of 1966, and the Aboriginal Rights referendum of 1967. Yet even before his first general election mandate the ALP had won a strong swing to itself in the Dawson bye-election, while during his last year they picked up surprise victories in the bye-elections for Corio and Capricornia. Most importantly of all,
the half senate election he fought in 1967 had shown that the tide was going out on the Coalition's previous House of Reps GE victory. Even the Whitlam-hating Alan Reid is forced to declare that Holt "
had done [electorally] badly as leader" in going down 8% at this election compared to the previous year's results in the other chamber, p.25.
In conclusion, I have to say I reckon the Liberal Party leadership instability doesn't post-date Holt's death. It post-dates Menzies' retirement almost two years earlier.
Henderson is correct when he writes, "
Harold Holt was not up to the job which Menzies had bestowed upon him. Nor, as it turned out, were his principal and potential rivals," p.195. I see little reason to believe that Holt continuing as PM (or attempting to continue as PM) doesn't still doom the Coalition to defeat at Whitlam Labor's hands in the early nineteen seventies. The form of that defeat would merely be caused by a series of political crises different than what we saw in OTL.