Well, from earlier reports I think we were originally led to believe that Torchwood would air immediately after series two of DW ended, but this sounds like it will probably finish just prior to the Christmas 2006 DW.
Which could mean any number of things, but I would speculate that Torchwood will be a self-contained series, neatly packaged so that all loose ends are tied up by the end of it in case it doesn't fare too well - but with enough 'seeds' to enable a second series if it does.
Captain Jack may well return to DW in the Christmas 2006 episode, particularly if the rumours about Billie leaving then are true. Either way it's likely he may return for series three of DW (and may even become full-time companion again, for a while) to help the audience transition if Rose leaves, possibly?