Moderate, centrist and Red Tory Conservative Party activists need a credible leadership candidate to rally around.  There are a couple of credible aspirants now in the race that could fill this need but they haven't generated a strong response to date.  In short, you "can't beat something with nothing".

On the other hand, while O'Leary currently generates enthusiasm in some quarters on the Prairies and in Ontario and BC to a lesser degree.  He has too many negatives (let us count the ways!) and too small a natural target audience (i.e. the well to do and well to do wantabes) to be able to really capitalize on his public recognition through the course of a leadership campaign, let alone the almost three years until the next General Election.

Arguably, his prospects will wilt quickly if and when he formally declares that he is a candidate.