I'm a lifelong Southerner, and I firmly believe many conservative white Southerners (not ALL, but many) could not walk into a voting booth and pull the lever for Colin Powell. For some, it would be his moderate (even liberal) stands on some issues, like abortion. And if you are a pro-life conservative, that's a legitimate reason not to vote for him.
For others, it would be because he's black. I hate saying it, but I've spent 30-plus years living in the South, and I've been listening to white Southerners all my life. The South has made many strides in the last 40 years -- but not everyone is free of racism. Some wouldn't vote for him. Not all. But some.
Because of that, I doubt Powell wins the Republican nomination in 1996. The Republican powers-that-be treat him the same way they treated McCain in 2000. Plus, Powell was enormously popular in late '95, when no one knew where he stood on any of the issues. His candidacy would have peaked the day he announced. After that, as he described his views, his Republican support would evaporate.
If Powell did win the nomination, it's not a certainty to me that he beats Clinton. If a pro-choice Republican ever won the nomination, you can be sure that a pro-life third-party candidate would emerge. (Buchanan?) Many Christian conservatives would then support that third-party candidate. I've had conservative friends tell me they could never vote for a pro-choice Republican.
History tells us that when an incumbent runs for reelection during a time of peace and prosperity, that incumbent wins. It has nothing to do with Clinton. People just have a "don't rock the boat" philosophy when the economy is strong, as it was in 1996.
Powell vs. the GOP field in 1996? Powell probably loses.
Powell vs. Clinton in the fall? Slight edge to Clinton.