After browsing around trying to figure this out, it appears that Minnesota state law does not allow rejected absentee ballots to be included in a recount, of which there are estimated to be about 6-12k. Many estimations expect Franken to gain votes in the 3000+ contested ballots (currently Coleman has ~100 more contentions). Even with Franken's expected gains, generally people seem to think Franken will lose the recount by about 50 votes. At this point, everything is within the margin of error.
As Minnesota's Canvassing Board doesn't feel they have the authority to make a ruling, this will go to the courts, no matter who wins the recount, to see if the rejected absentee votes can be counted. According to arguments made before Minnesota's Canvassing Board, according to an article in the Wall Stree Journal by John Fund...
Read the WSJ article here
... the court case will likely revolve around:
1) A Minnesota law requiring "complete voting activity be reported."
- Sounds weak to me. Ballots that are legally disqualified and legally denied recount could be reported as "discarded".
2) Equal Protection argument from Bush v Gore (I'm no expert on this ruling)
- This infamous Supreme Court ruling that decided that the different standards of counting ballots across Florida violated the equal protection clause. Similarly, Minnesota's rejected absentee ballots (vs other rejected ballots) are being treated differently. However, similar cases since Bush v Gore have failed because of Bush v Gore's controversial “limited to the present circumstances” ruling that has limited it as being a precedent.
3) Washington State's disputed 2004 governor's race
- A controversial ruling which released names and led to a scramble to obtain written oaths from people declaring how they had intended to vote. The Democrats won because they started their efforts sooner.
All very confusing... my brain hurts.