There are several short term advantages to the extension (more a second term than an extension) granted to General Kayani as the head of Pakistan's armed forces. By all accounts he is a competent officer who is well liked by the US brass. As the US looks for an exit strategy it will be useful to have a known quantity in place in Pakistan which will likely be important to whatever strategy Washington (or more specifically the Pentagon) comes up with. Kayani served as deputy military secretary to Benazir Bhutto and so is familiar with the current president and his entourage. I am sure there is a comfort factor here for Zardari. Kayani also served as the head of the ISI which gives him familiarity with the section of the military most closely involved (to put it mildly) with the various factions in the Taliban. He has also tried to distance the military from the internal politics of Pakistan - though this might just be window dressing.
These short term advantages may be overstated. While Kayani is competent there really is no dearth of competent officers in the Pakistan Army, including those in line to take over Kayani's job. Most of the senior officers of this generation have been trained in the US and would have no difficulty continuing the conversation with the US. While the others in line for the job do not have Kayani's ISI experience they have other experience that would come in handy. For example, the top candidate for the post Khalid Wynne has extensive experience in Baluchistan which is going to be one of the trouble spots in the coming years. He commanded the 41st Infantry Division in Quetta and headed the Southern Command in Quetta. His familiarity with the situation on the ground in Quetta may be as important as Kayani's familiarity with the Taliban. Finally, given the state of the military's reputation in Pakistan it is highly unlikely that anyone would undo Kayani's actions in trying to disentangle the military from the civilian government. As far as involvement of the military in politics the very fact of the extension is evidence of the involvement of the military in politics
Despite any short term advantages there are several long term disadvantages to this extension. There is more than a whiff of US influence in the granting of the extension. This will make any actions Kayani takes to go after the Taliban suspicious to an already conspiracy minded Pakistani public. The extension granted to Kayani brings an end to the military careers of the officers who were up for his job. This has to generate ill will in an army that is already ambivalent about the task it is being asked to do. The suspicion of the public and the softening of support within the military will make Kayani a weaker partner for the US during his second term. Finally, this was a lost opportunity to make a hero in a country that badly needs heros. Everybody knew that an extension (if not a second term) was Kayanis for the asking. Doing a Cincinattus and accepting retirement would have cemented his reputation as an incorruptible "soldier's soldier." One of the most effective actions by a general in recent times was the resignation of the Turkish Chief of General Staff Necip Torumtay in December 1990. His resignation blocked Turkey's participation in the first gulf war and its President Turgut Ozal's ambition to redraw Turkey's boundaries to include Kirkuk and Mosul. By not accepting this extension Kayani might have served his country and his institution, and incidentally US goals, much better.