This article notes a rumor that loyalists recaptured Zawiyah in the west and that over the last week, loyalist use of air power has been increasing. The sortie rate still seems really low, but the loyalists are getting planes airworthy and armed, with pilots loyal enough to carry out bombing runs.
Strategypage also notes that loyalists are actually still contesting control of Tobruk far to the east, when up to now I'd thought it was locked down as a rebel stronghold. They also still count Zawiyah as being contested.
This assessment should worry the rebels:
The rebels have more armed men, but most are civilian volunteers, armed with assault rifles and not much else. There is not much training or discipline, and little experienced military leadership. The government has some warplanes and armed helicopters, as well as some tanks and artillery. The government forces also have some civilian volunteers and a growing number of foreign mercenaries (from Tuareg tribes to the south, as well as Eastern Europe and Syria). The government forces also better discipline. Many senior men from the security forces and the military have remained with Kadaffi, for the moment.
As I've noted, uprisings, defections, and desertions led to the vast majority of rebel successes. The capture of the oil facilities at Ras Lanouf is the only real battlefield conquest of the war (holding judgment on Zawiyah's status for now). As time goes on, the shock is wearing off on the loyalist side, and the heavy weapons, air power, and organization and training advantages will allow the loyalists to begin to counter-attack to the east.
If Zawiyah is locked down on the loyalist side, expect the city of Misrata to become the main effort of the loyalists. Take that, and the loyalists will be free to move in force to the Sirte area and try to take Ras Lanouf and then drive into the heartland of the revolt.
Khaddafi hasn't won yet, but neither have the rebels. The rebels desperately need outside spooks, special forces, and military contractors to train and organize their light infantry, support them by putting existing heavy weapons and air defense weapons in service, advise or lead the rebels in combat, plan a campaign to win the war (or just survive as a break-away region), and organize logistics to sustain a long campaign, and wage an information campaign to reignite a wave of defections or desertions on the loyalist side--or at least make Khaddafi worry that his side could collapse and perhaps encourage him to flee just in case.
I really don't think that a Western no-fly zone would be significant. Tanks and artillery provide far more firepower than the small sortie rate the Libyan air force has generated. I can't quantify the morale effect, which is real, but for pure combat support, ground-based heavy weapons are far more significant. And I don't think a no-fly zone would be enforced against transport planes that could be carrying civilians that would provide a propaganda victory for Khaddafi if he can point to plane wreckage filled with dead kittens and Red Crescent workers (and no bodies of young, military age men or weaponry in sight). Far less effort to put rebel-controlled air defense weapons in action would help the rebels nearly as much and avoid the rigged tragedy scenario.
The American government and continental Europe have been torn between a desire to intervene against the tyrant Khaddafi to get on the right side of a revolt and to prevent a wave of refugees into Europe on the one hand and the limits of action that past rhetoric attacking the legitimacy of the American war against the far worse tyrant Saddam Hussein in Iraq has imposed on the other hand.
UPDATE: I highly recommend this article. Highlights:
--No-fly zones would not do too much since aircraft aren't that significant for the loyalists and low-flying helicopters are much harder to stop with a no-fly zone.
--No-fly zones do not require attacks on ground-based air defense systems.
--Given time, the rebels could match the loyalists in unit quality.
--Given time, sanctions could degrade Khaddafi's ability to wage a long civil war. I doubt that is true in the long run. Sanctions-busting has a system out there to get money to Khaddafi if he can export oil from the western sources. In the medium term when sanctions might have some bite, I'd guess Khaddafi has the money to fight until oil exports can bring in new revenue. The rebels may have an easier time raising money with oil exports from eastern sources, however, which would do more to redress the weapons and training imbalance that favors the loyalists right now.
--Khaddafi may not be able to risk moving his best units out or Tripoli since an uprising could take place without their presence.
--Khaddafi's forces likely suffer from waning morale. I disagree with this assessment. As I wrote, I think the loyalists survived the nadir of morale and if they can achieve some success, they will gain faith in eventual victory--or just of survival in the west.
This is an AP article by David Stringer. While I always take what the press tells us with a grain of salt because they often don't have the ability to interpret what they see on the battlefield, this article was a straightforward report on a reputable military analysis. I'll take my gems where I can get them.
UPDATE: This article says the Zawiyah has fallen to the loyalists, based on the initial report I cited and "confirmation" by the government. I still count this as unconfirmed, although I figure the city will fall to the loyalists given enough time.
UPDATE: This article says the rebels still hold the center of Zawiyah but are under heavy ground attack.
UPDATE: This reports that some loyalists around Misrata have peeled off to drive east to reinforce the Sirte forces.